New Zealand is back in lockdown and hopes of an early border reopening have been dashed, but the cows still have to be milked. And injecting a cheerful note into an otherwise downcast country this week, prices at the latest Fonterra global auction broke a losing run of eight consecutive falls, banishing fears that the opening price for the season might have to be trimmed.
The co-operative has set the opener for the 2021/22 season at between $7.25kg/MS to $8.75 with a mid-point of $8. Its previous highest-ever opening price was $7kg/MS.
At this auction, the price index lifted 0.3% from the previous auction a fortnight ago, with the average price at US$3,827. Prices for skim milk powder, butter and anhydrous milk fat rose, while whole milk powder declined. The average price is sitting 21% higher than at the same time last year.
“The cream group and skim milk powder did the heavy lifting, while whole milk powder lost further ground,” said NZX dairy analyst Stuart Davison. “Cheddar prices gained also, while lactose prices finished the auction unchanged.”
The average price for WMP, which has the most impact on what farmers are paid, fell 1.5% to an average US$3552 (NZ$5040) a tonne, after a 3.8% decline at the previous auction.
“WMP prices continue to let the team down, but it seems that the momentum of the WMP price slide has slowed, and prices might start to find some support in the near future,” Davison said.
North Asia was the largest buyer of WMP, although the region bought less than at the previous auction and significantly lower than at the equivalent event last year, he said. Buyers from the European Union, the Middle East, Africa and South and Central America all purchased more whole milk powder at the latest auction.
“This trend in buying highlights the current level of global demand for dairy products,” he said.
The very firm prices at the auction confirm that the country’s primary industries are still underpinning the export economy, which suffered the loss of earnings from international tourism and education when Covid-19 hit.
The ANZ World Commodity Price Index came off its record level last month when it eased 1.4%. In local currency terms, though, the index barely changed, lifting just 0.1% m/m, as lower commodity prices were offset by a softening in the NZD trade weighted index.