After a flurry of price rises dairy commodities have taken a breather over the last few weeks. Irrespective of the result of this week's gDT three things suggest a very good outlook for at least the second half of 2012/13 and for 2013/14.
Yesterday's slight reduction in globalDairyTrade results was neither here nor there for the current season. The overall index fell by 0.9% with falls for Cheddar, Casein and AMF but with a 2.8% increase in Whole Milk Powder. Of note was WMP sales values into the 2013 calendar year which were up in value by 8%.
I apologise in advance if I offend any one but I have seen this a number of times and it is still funny. I wonder what they would say about MyFarm Syndicates (the only thing I can think about is the rigmarole we go through every year grazing out 25,000 cows in Southland - but then that isn't very funny).
Hopefully because everyone is the "butt" of the humour I can get away with it.....
In today's NZ Herald (I like the new look website) Brian Gaynor compares the growing rural economy with urban New Zealand in terms of their outlook, attitudes and opportunity to grow - see
Although the increase wasn’t great – at 2.4% the latest globalDairyTrade result was a very good one. It is 4 years since there have been ‘four in a row’ positive adjustments.
Key movers were;
In particular it is pleasing to see WMP up over $3000 per tonne.
A good summary from the NZ Herald follows analysing the latest gDT auction result. Looking at the auction data there is still a lot of potential for further price rises - Whole Milk Powder is still trading at around US$3,000 per tonne when they could (should) be around $3,500 to $3,750/tonne.
Dairy prices rose to the highest level since early April in the latest GlobalDairyTrade sale, the third straight gain, with increases for all eight products on offer.
The week started with an unexpected reduction in Fonterra's milk price from $5.50/kg milksolids to $5.25/kg. A reduction wasn't a complete surprise but this blogger had mixed up his Fonterra board meeting dates and had thought no news was good news.
It is hard to see the funny- or up- side of a price reduction. But the Fonterra press release was quite positive trying to balance the strength of the $Kiwi (negative) with increasing market prices.
Every Thursday the "Drought Monitor" releases their revised assessement of the status of US farmland. In summary their latest release shows;
TOO DARN HOT: The USA's most withering drought in decades only got worse in key farming states last week despite cooler temperatures that provided a break from the stifling heat, according to a new drought report.
WITHERING CROP: Just over two-thirds of Iowa, the nation's biggest corn producer, is in extreme or exceptional drought, up more than 5 percentage points from the previous week.
globalDairyTrade, the online dairy commodity auction established by Fonterra, rose by a surprising 7.8% this morning. Market watchers had expected a rise following the worsening of the US drought - futures prices have been tracking up in the past two weeks. 7.8% though was a big result given the volume of product sold at more than 43,000 tonnes.
MyFarm forecast rising milk prices with the eventual outcome a milk price with a '$6' at the start.
It doesn't feel quite right to feel happy at someone else's misfortune but many American farmers have crop insurance - so I'm making an exception to this rule.