Few favourable economic signals in sight, but there’s a glimmer of light in GDT dairy export prices

Kiwis  returning  to  work after their summer  breaks  and  scanning the  economic horizon  may  find  few encouraging signals. Even  the  agricultural sector,  which proved  to be  the  mainstay at the height of the Covid pandemic, is  now having to navigate  the inflation  raging in the domestic sector.

As  well, as  Point of  Order noted at  the  beginning of  December, NZ  exports have been hit by falling world prices and a rising NZ dollar. It  was a sharp reversal from earlier in the year when ANZ Bank  was reporting its  commodity price index  had returned to its record breaking run  and stood  nearly  20%  above the level  where it had been  12 months previously.

So  there  may have been a glimmer  of  light in the  latest Fonterra GDT auction at which 31,872 tonnes of dairy product was  sold at  an average price of $US3,393  ($NZ5,280) a tonne,only 0.1% lower than at the previous  auction, when prices fell 2.8%.

The key product  of  WMP was  0.1% higher  at $US3,218 a tonne, while  cheddar also  rose, by 4% to $US4,871.

Butter  fell 0.6% to $US,4,449,and SMP 0.3% to $US2,842.

Cheddar  prices  have proved  to be the  most  resilient. Analysts  say  GDT cheddar continues to be a strong option for global buyers, especially when compared with EU or US options, most likely the reason the GDT price is steady   in the $4800  range.

If the  market has  stabilised, it  will be  welcome news  to Fonterra’s  famers,  but  also at  its Auckland HQ where  there might have been concern  that another  adjustment to its payout forecast, lowered  to  a  range of  $8.50-$9.50  in December, might have had  to be  considered.  

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