Global Dairy Trade auction slump continues
The overall price fall of 1.3% continued a slump of more than 50% since early 2014, due to world-wide overproduction, subdued demand from important markets such as China, and Russia’s ban on US and European food imports.
The auction wasn’t all bad news, with prices falling only 0.2% for skim milk powder and 0.1% for whole milk powder — described by some analysts as “turning a corner”, after three months of plunging prices.
It is now cheaper for many buyers to import milk powder than to purchase domestic raw milk — which could support prices.
And EU intervention buying would also be expected to provide a price floor if powder prices fell further.
But on the market supply side, whole milk powder coming on the markets is forecast to rise from July onward as new season New Zealand product starts to be forward sold.
With New Zealand’s dairy farmers among those most exposed by falling prices, the NZ dollar has fallen to a five-year low against the US dollar, enabling interest rate cuts which will help heavily indebted farmers.
