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The recent auction of the Global Dairy Trade showed a rally in the price of milk overnight after a series of bearish drops back in 2013 after the economic slowdown from China and the global oversupply.

A rise of 18.9% in the prices of whole powdered milk(WMP) comprised a huge chunk of the said auction while there was a 3.0% rise for powdered skim milk and a jump of 14.2% in the prices of butter.

The production of dairy products forms the spine of the economy of New Zealand and almost 25% of their exports. The sudden rise in the prices of the said product is expected to boost the overall production of farmers from New Zealand and their currency. After the slump in the prices of their products in 2014, the farmers from New Zealand experienced a slow growth with lesser expenses.

New Zealand who exports mostly whole milk powder(WMP) and the 18.9% jump led the price of the product to cost $2695 every tonne the highest the WMP has been since October last year.

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The previous auction also showed a jump in the prices with a 6.6% gain. According to AgriHQ analyst Susan Kilsby, most of the active buyers in the recent auction were comprised of South-East Asian and Chinese buyers and a total of 177 bidders, 119 of which have managed to win their bids. The auction also led to the eventual boost in the prices of the products.

 

Breakdown by the numbers

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The forecast for the season was $4.25/kg/ms with the current season the third in the row to show prices that fell below $5.

Dairy products at the recent auction traded 37,766 tonnes at $2,731/MT which was the average price paid.

As of today’s Global Dairy Trade, all dairy products including lactose which jumped at 3.5%, whole milk powder (WMP) at 18.9%, buttermilk powder (BMP) at 18.1% and skimmed milk at 3% respectively.

The recent auction two weeks ago also showed an increase of 6.6% in the prices with the whole milk powder rising at 9.9% and rennet casein with an increase of 16.3%.

Earlier this year, prices were also held back by the oversupply specifically from Europe although according to analysts, the oversupply is now coming to a halt after production has dropped by 10% in the UK.

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Whole milk futures also traded to $2,770 in a 20% climb on the NZX the highest at the moment for 2016.

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