AMF leads dairy price ease

Dairy commodity prices eased another 0.6% at the Global Dairy Trade (GDT) event overnight, driven by falls in prices for anhydrous milkfat (AMF) and skim milk powder (SMP).

Prices for all other commodities lifted.

AMF prices plummeted 7% at the April 3 GDT event. Regular grade AMF to ship in June dropped 8.6%.

Ahead of the event the NZX Dairy Derivatives market had expected no change in AMF prices. AMF was expected to hold relatively steady over the next few months, as demand has been steady and supply is limited, especially from NZ. There was less AMF sold at this event than at the previous event – though still 42% more than at the same event a year ago. AMF prices are now at about the same level they were a year ago.

SMP prices fell 1.8%. Medium heat SMP to ship in June fell 2.8%. The derivatives market had expected a 0.8% fall in this grade and contract of product ahead of the event. Europe still has mountains of SMP in intervention to get through, and is expected to produce more as the region heads towards its milk flush. SMP prices are unlikely to find any support for quite some time, as global stocks continue to be worked through. Oceania SMP does continue to maintain its premium above European product.

Whole milk powder (WMP) prices lifted 1.6%. Regular grade WMP to ship in June was up 1.1% – a better result than expected by the derivatives market ahead of the event. The derivatives market had anticipated a 1.7% fall in this grade and contract of product. Fonterra did release its February milk production data yesterday, which showed its collections were down 4% year on year. This likely provided support to WMP prices.

Butter prices bounced 4.1%. Unsalted butter to ship in June lifted 5.4%. This was a much better result than indicated by the Derivatives market, which had expected a lift of just 0.2%. Demand for butter remains strong, which is contributing to keeping prices high. The divergence in the prices of butter and AMF means butter is now considerably more expensive than AMF when priced on a milkfat content basis.

Buttermilk powder prices lifted 1%, cheddar was up 2.2%, lactose lifted 1.1% and casein jumped 12.1%.

Article sourced from Farmers Weekly.

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