Dairy product prices are expected to slip at the Global Dairy Trade auction overnight amid a pick-up in supply, even as global trade tensions appear to benefit demand for New Zealand dairy products.
Indeed, favourable weather helped New Zealand milk processors collect record levels of milk in the last two months of the 2017/18 season, according to Dairy Companies Association of New Zealand data.
ANZ Bank New Zealand research analysts predict “further price slippage” at the June 19 GDT auction, though “only toward the bottom of recent ranges.”
"Higher end of season inventories and increased GDT volumes both appear to be weighing a little," ANZ economists said in a note on Monday, adding that whole milk powder prices have pulled back to the bottom of the US$3,200-$3,300 per tonne range.
At the most recent event on June 5, the GDT price index slid for the sixth time in eight auctions, with whole milk powder falling amid increased volume on offer and higher milk collections by Fonterra Cooperative Group.
“It has generally been a guess in recent times but given most whole milk powder futures sit below their last GDT equivalents — our pick is flat to down,” Nigel Brunel, director, at OM Financial in Auckland, wrote in a note on Tuesday.