Here is Tim Newton in our latest edition of the Inside Track, unpacking a 4.1% drop in the GDT index, driven by softer pricing across most commodities. Whole milk powder fell 5.1% amid strong late-season NZ supply, while skim posted a smaller-than-expected drop. Fats and cheddar also eased, with notable price gaps between prompt and peak contract periods. Tim also touches on upcoming tariff impacts and rising competition for milk as the new season kicks off.
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Hello and welcome to this edition of Inside Track, coming to you from a very windy Brisbane. Before we get into the main details of the GDT event held overnight, I just want to congratulate Adrian Lochland for being promoted to the group CEO. It’s Maxum’s first CEO across our 21, 22 year history. So exciting time for the company. On to the numbers.
The overall index was down 4.1%. This was largely driven by whole milk powder, but also probably the sentiment being that there’s a lot of product available this late in the season. As everyone would have noticed, the May milk production figures out of New Zealand were really unexpected and really strong. So it’s probably telling two things that there’s good product availability for this time of year and a relatively good start to the new season.
Looking specifically now at whole milk powder, it bore the brunt of the fall overnight, down 5.1% overall. The interesting thing with this number was the drop in the peak months across that September through December period probably shows again that a product availability is quite good for this time of year and people are happy to sit out and wait until the season kicks off.
Looking at skim milk powder, it too was down, but only 1.7%. Of all the commodities, it was probably the most positive despite posting a negative number. The SGX futures predicting slightly larger drop on skim and with some really good availability out of Europe and the US, people were expecting that to come off a little further. So it’s probably a little bit more positive about skim than it is a negative, but still down 1.7% overall.
Moving to the fats now, butter was down 4.3% and probably tells the story of two halves. There’s still some limited availability of some products, particularly salted butter, which wasn’t available in contract period one, but is showing now availability out further. But it also shows the difference between the prompt or close by shipping periods and the further out where there’s now an $800 to $900 gap between contract period one and contract period four or five, showing that demand is still there for that close by period that people again are sitting out and happy to wait for that volume across the peak.
Similar to butter, AMF was also down but slightly less at 4.2%. Again, it’s showing a big discrepancy between the prompt shipments, so contract period one and the across the peak period. So contract period one was a bit of an anomaly in the event overall. It was up 8% showing that the demand is very, very strong for the July through September period that easing off the shipments post that period.
Looking at cheddar now, it was like all other products down 2.8% and the gap between the contract period one and all other periods was also quite big. Contract period one was still well elevated compared to the other commodities. It’ll be interesting to see in the coming weeks whether any new or revisions to US tariffs have an impact on cheddar. It’s one of the more readily exported products out of the US, so it will be a really fascinating watch in the coming weeks. Similar to cheddar, whey will also be affected by some of these tariffs, particularly with the buying activity out of North Asia. So we’re definitely one to watch in the coming weeks.
Well, that wraps up this edition of Inside Track. Thank you very much again for watching. It’s a fascinating period in the next couple of weeks as all the big processors look to finalise their milk price and their milk collections for the new season. It’s been a very intense period, particularly in Victoria, as the competition for milk really starts to hot up. Also a very interesting buzz in the office at the moment with the Reds playing the Lions tonight at Suncorp Stadium. So with a very multicultural office, there’s a lot of Lions and Reds jerseys kicking around.
Thank you and I’ll see you in a couple of weeks.
