Source: Radio New Zealand
123RF
Supply pressure and buying interest saw dairy prices continue their climb at the latest Global Dairy Trade auction overnight.
The average price rose 5.7 percent overnight to US$4301 (NZ$7299) a tonne.
It was the fifth consecutive auction where prices have risen since the start of the year and followed a 3.6 percent rise at the previous one.
The New Zealand exchange’s head of dairy insights Cristina Alvarado said even though milk production has been high in the key global regions the volume on offer at the event was down.
She said Fonterra was the company with one of the biggest offerings, but New Zealand was now heading toward the end of its milking season.
“New Zealand’s milk production curve is now firmly in seasonal decline, and forward offer volumes through March to May indicate further easing,” she said.
“At the same time, growing domestic protein demand in the United States and new cheese capacity not yet operating at full utilisation are absorbing milk locally.”
She said with the tightness of product in the US demand was higher for certain products, particularly skim milk and butter.
“We’ve seen a pattern in this last year of more buying what you need rather than building large stocks.”
The important whole-milk powder price, which influences farmer payouts, rose 4.5 percent to US$3863 a tonne.
There were price gains across the board too with skim milk powder up 9.1 percent, along with butter up 6.1 percent, mozzarella 7.9 percent and cheddar 4.3 percent.
The regions which bought most of the product were North and South Asia, however, Alvarado said in terms of percentage buying there was an increase from those in Europe, the Middle East and Africa.
“With ongoing geopolitical tensions affecting Middle Eastern logistics and trade lanes, and in the absence of recent Algerian tenders in the region, it is notable that EMEA [Europe, the Middle East and Africa] participation strengthened rather than retreated.”
Alvarado said the Middle East was a “significant” and “growing” market for New Zealand – among our top three buyers.
“It’s definitely a key region and we would hope that despite everything going on and as we saw at the auction today they’re still buying product, even more so.”
While the conflict had brought “some logistics challenges”, she said it presented a competitive advantage for New Zealand in getting supply to its key buyers in Asia over other competitors in Europe.
Alvarado expected prices to remain steady with continued prices increases, though possibly at lesser rates.
“I don’t really see them dropping as there is a need for product and from our end we are heading towards the end of our season.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand