Australia-Good news for Dairy farmers.
AUSTRALIA-ENCOURAGING NEWS FOR DAIRY FARMERS.
On Fonterra’s internet auction system globalDairyTrade last week, whole-milk powder prices rose 16.6 per cent on last month.
"It’s good news," Dairy Australia’s international industry analyst Michael Harvey said.
"It might put a floor in the market - we have been waiting for the market to bottom-out."
At the end of bidding on globalDairyTrade last week, the average for all products was $US2158, compared to $US1851 last month.
The biggest price move was in June-August shipments from New Zealand ports, which rose 19.1 per cent. September-November shipment contracts increased 16.7 per cent, while the May shipment lifted 14.7 per cent.
Last week’s sale was the first in which globalDairyTrade has not recorded a negative result.
Prices have continually dropped since the first sale in July, with the largest monthly drop of 14.9 per cent recorded in September.
The recovery is a result of buyers coming back into the market after low prices.
Mr Harvey said the increase was dramatic.
"It was a strong jump in terms of where prices were at," he said.
"We expected prices to come up . . . but not that much."
But those tempted to celebrate the price recovery have been warned.
Mr Harvey said this was only one price indicator and within the market there was "still a lot of uncertainty at the moment".
He said there was more milk powder in international stockpiles than this time last year. However, farmers are expected to produce less this year.
And further proof a market floor price may be on the way is a Dairy Australia survey of Australian dairy export companies and major dairy traders that revealed the spot price for whole milk powder and skim milk powder.
Prices at the upper end of the trading range of whole milk powder rose $US100 a tonne, from $US1700-$US2000 in January to $US1700-$US2100 last month.
Skim milk powder trading range prices also increased $100/tonne.
Dairy Australia strategy manager Joanne Bills said this rise was a positive sign and the stabilisation of the market across the other commodities "all lines up" with the internet auction results.
"While we are still not sure what the total story is around demand, there has been enough pull-through that buyers have to come back into the market," she said.
According to the survey, butter dropped $US50/t last month compared to January but cheddar remained firm at $US2300-$US2900.
While butter recorded a decrease in price, Ms Bills said this is still a positive sign because the drop was only minor compared to previous months, butter prices went from $US1700-$2350 in December to $US1550-$2100 in January.
