The eight Global Dairy Trade auction of the year may post a second consecutive rise in dairy product prices, the latest dairy futures market suggests.
New Zealand bank ASB, last week said that the current futures market trading hints that whole milk powder (WMP) may be up between 1-3% today.
Of the seven auctions this year, only two have posted positive results and none of the auctions have posted consecutive positive results.
Dairy two-step! #NZXfutures market so far points to 2nd consecutive WMP rise of 1%-3% at next week's #GDTauction ^NP pic.twitter.com/Etc3GD0XfD
— ASB Markets (@ASBMarkets) April 14, 2016
[yes-app]
[/yes-app]
The last Global Dairy Trade auction posted a 2.1% rise in dairy product prices. It followed a negative auction in March when dairy product prices fell 2.9%.
At the last auction, the main movers included anhydrous milk fat and cheddar, while skim milk powder (SMP) and whole milk powder (WMP) were only marginally up, up 0.1% and 1.5% respectively.
Meanwhile, the rise and fall nature of dairy prices is likely to continue, according to Nathan Penny, ASB Rural Economist.
He said that over the coming months any price lift will be modest and often accompanied by a subsequent price fall.
Penny goes on to say that in the longer term, the weakness of dairy markets will re-enforce the cycle of price recovery.
He also said that New Zealand dairy farmers can expect milk prices to remain low this year, if they stay low during the first half of the season.
Penny also said that the announcement earlier this year of EU support measures for the dairy industry may have muddied the dairy price waters.
He says that due to the changes in EU support measures, buyers were likely to have taken a step back to see how the changes affect the market.
