Next GDT auction could see whole milk powder rise
Premiums in the NZX futures market suggest the rise could be between 5% and 7% at the auction.
The price of whole milk powder may rise for the fourth straight auction on the GlobalDairyTrade platform next week in a further sign that global supply and demand is rebalancing.
Premiums in the NZX futures market suggest the rise could be between 5% and 7% at the auction, according to OMF, adding to a jump of almost 19% at the August 16 sale which took the price to $US2,695 a tonne, the highest since October 2015.
In each of the past two auctions, prices have exceeded futures market predictions amid signs the worldwide supply glut is easing, bolstering optimism about the outlook. The GDT volumes for next week, released yesterday, show 19,500 tonnes of whole milk powder will be offered, down from 21,500 tonnes at the last event and up from 18,000 tonnes a year ago.
Traders say buyers who "sat on their hands" earlier in the year are back in the market, while the supply side remains limited.
Last week, Fonterra Cooperative Group raised its forecast farmgate milk payout for the current season by 50c to $4.75 per kg of milk solids, citing the recent price gains on the GDT auction as global production is scaled back, while chairman John Wilson says prices were still at "unrealistically low levels."
New Zealand's terms of trade data for the second quarter, released this week, showed an 18% increase in the volume of milk powder, although an 8.7% decline in prices reduced the uplift in the total value of dairy exports to 1.6%.
(BusinessDesk)
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Jonathan Underhill
Fri, 02 Sep 2016
Fri, 02 Sep 2016
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Next GDT auction could see whole milk powder rise
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