Skim milk powder prices have moved sharply higher in the latest USDA market survey.
They rose an average of 36% in US dollar terms from their previous report on March 28.
Actual price rises in this market survey ranged from +26% to +45% for skim milk powder sold by Oceania suppliers which includes Fonterra.
In NZ$ terms the average rise was just as impressive - up by an average of 35%.
Over the same period, the New Zealand currency has risen just 2.6%.
The average skim milk powder price is now US$5,563 per tonne and $6,640 per tonne. These are rises of US$1,475 and NZ$1,756 over that two week period.
From the beginning of the year, skim milk prices have risen US$2,163 and NZ$2,563 per tonne, rises of +63% in either currency.
The rise in wholemilk powder prices has been strong too. They are up +11% in the past two weeks.
Butter prices rose +6% and Cheese prices were the laggard at +2%, but these tow categories typically lag the changes in powder prices.
Dairy product exports represented 25% of New Zealand's total exports in the year to February 2013.
Dairy prices
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3 Comments
Good news for farmers dealing with drought. Maybe Fonterror will raise their payout again this year. I hope so, but I doubt it.
By the way, good bit of rain this morning. I won't have to water the veggie garden today!
Lovely autumn morning, and I bet it will be summer again this afternoon. Brilliant weather!
HGW
What were your thoughts on what our guys Dairy NZ are saying?
Close to 40 per cent of North Island dairy farmers will not be able to meet their working expenses and interest costs this season, because of the drought, DairyNZ says. (whatever the price.......... it appears)
http://www.stuff.co.nz/business/farming/8527208/High-debt-farms-hardest…
DC: have you the/a link to the USDA report please?
What other US based folk are thinking:
http://www.agweb.com/livestock/dairy/blog/Know_Your_Market_281/the_dair…
Sometime in early March, discussions of drier weather in New Zealand went from "what if" scenarios to a more serious "we have a problem" reality. Chatter reached a fevered pitch, and global prices responded by rising rapidly as buyers focused their concern on the impacts of long-term drought. Earlier forecasts of year-over-year milk production growth in Oceania dried up with the pasture. China and other major world buyers turned a worried eye to the jeopardy this places on next milking season. U.S. buyers followed suit, and the U.S. dairy markets adjusted higher -- and how.
and.....
the July Nonfat Dry Milk Chart – Chicago Mercantile Exchange is worth a look..
and....
If you look at our current supply/demand situation from a domestic lens, you’d have a hard time making a reasonable argument that prices should go higher. Yet, dairy prices are on the rise.
and..
So what are producers to do?
As profit margins increase courtesy of weakening feed costs, the sensible approach is to focus on bringing profit home to your operation. Within that approach, however, recognize that markets can act highly irrational as uncertainty looms. I expect this to mean higher milk prices going into the summer months. Take advantage of price increases as they happen. Lock in profit as you can. Or secure a floor price on your production. Banks will accept some rough times but have a hard time swallowing $4.00 and $5.00 per cwt. losses like were experienced in 2009. And you don’t want your dairy to be blowing in the breeze when the world realizes it has enough dairy in its fridge.
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