The gDT auction this morning fell 2.6%, the fifth successive fall. Global dairy prices are suffering a correction after an extended period of very high prices.
Whole Milk Powder, the major product now exported from NZ, fell by 1.6%, and an analysis of the value by supply period gives us some confidence that this is a readjustment of the market rather than a significant change in supply and demand conditions. At these prices a milk price of circa $7/kgms is likely for 2014/15.
At this mornings globalDairyTrade the weighted index fell 8.9% following on a number of falls since mid-February.
I have blogged about the variability of gDT results a number of times, the most recent only one month ago.
Fonterra, which controls about one-third of world dairy exports, unveiled a 53% drop to NZ$217m in earnings for the six months to the end of November 2013
It was so nice to wake up to plaudits for Fonterra and the dairy industry this morning compliments of NZ Herald business editor, Liam Dann.
To read Liam's full column click here. My favourite excerpt of his well crafted piece is below.
This morning's globalDairyTrade event resulted in a market adjustment with prices for the trade weighted index of products down by 4%.
Two things interest this writer - the level of variation in gDT results and the forward price curve.
In an astonishing address, China's Deputy Head of the Central Rural Work Leading Group, Chen Xiwen noted that
The following is taken from interest.co.nz.
The following is a note from RACHEL ABRAMS writing in the www.afr.com (the Financial review).
Sometimes technical issues matter. One of those is the Income Elasticity of Demand. Understanding this gives a good guide to how the demand for goods and services fluctuate according to changing income levels.
Please bear with me!
An interesting piece today from Craigs Investment Partners on the value of Fonterra shares. As shown below, their target price is $5.51 per share; the current price is $6.17 per share.