MPI allays foot-and-mouth rumours while prices fall again at dairy auction

It’s a tense time in New Zealand’s farming industries. Already the Ministry for Primary Industries has  had to shoot  down  an  overseas  news  report that  China  had  shut  its  borders  to  NZ  and  Australian  products  due  to  concerns   about  foot-and-mouth.

NZ  exports  to  China  are  continuing  as   normal, a Ministry  for Primary Industries spokesman said.

And Fonterra’s  fortnightly GDT auction  went  ahead  as scheduled  this  week,  with  keen  bidding   by   Chinese buyers.

Prices fell  for the  fifth  consecutive  time but  buying  caution  was  attributed to  the  fact consumers  are  worrying about soaring food prices. Other  observers  noted  the  impact on demand of disruption from Covid-19 lockdowns in China, an economic crisis in Sri Lanka and the Russia-Ukraine conflict.

The average price at the fortnightly sale fell 2.9% to US$3768 a tonne,   a  slower  decline  than  the 5% at the previous auction.

Prices have been falling since hitting a record high in March, and are at their lowest level since February 2021.

The wholemilk powder price, which strongly influences payouts for farmers, fell 3.5%  to US$3417 a tonne.

NZX dairy insights manager Stuart Davison said this price decline isn’t at the same rate as the previous handful of auctions, with decent demand arriving at the beginning of the auction, and sticking around for three rounds. That hasn’t happened previously  at recent auctions, with  almost a glimmer of demand returning for wholemilk powder.

The anhydrous milk fat index posted the biggest decline, slumping 9.8%. Other indices gained with cheddar up 4.2%, butter up 0.2% and skim milk powder up 0.1%.

North Asian buyers purchased the most at the latest auction, but only marginally more than South East Asian buyers, while buyers from the Middle East purchased larger-than-normal volumes, Davison said.

“For me, this event is relatively positive, it seems like a very different auction to that of the last four events, and definitely different to the last 10 auctions. As supply of commodities on the GDT platform seasonally increase, this will be an interesting trend to watch; has the market finally scratched some direction from somewhere?”

North Asian buyers were in the driver’s seat of wholemilk powder bidding and purchases, he said.

African buyers were notably absent, buying “next to nothing” at the event.

Global dairy prices set the price which Fonterra and other processors pay farmers for their milk.

In June, the co-op lifted its forecast farmgate milk price for the current season to between $8.75 and $10.25kg/MS. The $9.50kg/MS mid-point, which farmers are paid off, would set a new record.

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