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.