Global dairy price dip defies NZ drought
Weakness in global dairy markets was reflected in Tuesday’s steep 3.9% auction fall in the GDT Price Index — in spite of the deepening drought conditions threatening supplies from New Zealand, the world’s biggest dairy exporter, writes
New Zealand has already exported more than €7.bn of dairy produce in 2017 up to October, but the auction price fell 2.5% for its important Whole Milk Powder commodity — despite those farmers who are operating in some drought-stricken areas drying off cows, or going to once a day milking.
In just a few weeks, hot dry weather has turned New Zealand pastures to concrete from swamps, after a very wet winter and spring, and the North Island West Coast is forecast to get continuing higher temperatures and lower rainfall than normal.
Dairy farmers have been advised to set trigger points for once a day milking, or early culling (but prices for culls have fallen sharply, due to weather uncertainty).
Meanwhile, the EU’s 380,000 tonne skim milk powder stockpile must be sold, which is also helping to depress global dairy markets.
The GDT auction price for skim milk powder fell 4.8 %, not surprising with nearly 22,000t of it available for sale from European Union stores this week (including 7,300t in Ireland) and more than 100,000t available for sale in January.
However, Irish farmers will be hoping for a steady milk price, buoyed up by the Ornua PPI Index at 115 — which is its second highest point since mid-2014.
That sentiment has been reflected in most of the big processors opting to hold prices steady for November milk supplies,which they announced over the past week.
Before Tuesday’s last Global Dairy Trade auction of the year, analysts had predicted the threat of drought in New Zealand may push up prices for whole milk powder, and the abundant supplies of skim milk powder in Europe might depress prices for that product.
They said the extremely hot and dry New Zealand summer will reduce milk supplies, which are on the rise generally elsewhere in the world.
However, the steeper than expected fall in in the overall GDT price index may point to weakening demand as well as growing supply around the world,
