Whole Milk Powder Prices Dip, But Upside Risks Remain for Milk Price Forecasts
Source: The DairyNews
After five consecutive increases, whole milk powder (WMP) prices declined in the latest Global Dairy Trade (GDT) auction. Despite this dip, Westpac chief economist Kelly Eckhold sees potential upside risk to the bank's $8.40/kgMS forecast milk price for this season, according to ruralnewsgroup.co.nz.
The recent GDT auction saw the price index drop by 0.5%, with WMP prices falling 2.5% to USD 3,394 per metric tonne. Eckhold highlighted that the auction results were mixed, with futures markets indicating a modestly weaker outcome. While WMP prices weakened, butter prices rose by 6.2%, and skim milk powder prices increased slightly by 0.2% to USD 2,766 per metric tonne.
"Chinese buyers pulled back this time, but Southeast Asian and Middle Eastern buyers filled the gap," noted Eckhold. "Overall prices remain around 10% above their long-term averages. There is some upside risk to our $8.40/kgMS milk price forecast for the 2024/25 season, but it's still early days."
Fonterra has set an opening forecast range of $7.25-$8.75/kgMS for the season, with a midpoint of $8/kgMS. The cooperative indicates that milk supply and demand dynamics are finely balanced, and China's import volumes have not yet returned to historical levels.
Listed milk processor Synlait has also announced an opening forecast of $8/kgMS for the 2024-25 season, adopting a conservative stance due to the volatile nature of global dairy commodity prices at the start of the season. Synlait's farmer suppliers have received, on average, $0.28/kgMS above the base milk price for the past two seasons, and similar incentives are projected for the 2023-24 and 2024-25 seasons. The company commits to monitoring market movements and keeping suppliers informed.
Meanwhile, Taupo-based milk processor Miraka has set a 2024-25 season milk price of $8.42/kgMS. Miraka's chief executive, Karl Gradon, emphasized the company's dedication to paying the best milk price to its suppliers. Miraka will offer a base price of $8.25/kgMS, with farmers having the opportunity to earn additional premiums through the Te Ara Miraka farming excellence program. Since its inception in 2010, Miraka has paid over $21 million in premiums to its farmer suppliers.
"Chinese buyers pulled back this time, but Southeast Asian and Middle Eastern buyers filled the gap," noted Eckhold. "Overall prices remain around 10% above their long-term averages. There is some upside risk to our $8.40/kgMS milk price forecast for the 2024/25 season, but it's still early days."
Fonterra has set an opening forecast range of $7.25-$8.75/kgMS for the season, with a midpoint of $8/kgMS. The cooperative indicates that milk supply and demand dynamics are finely balanced, and China's import volumes have not yet returned to historical levels.
Listed milk processor Synlait has also announced an opening forecast of $8/kgMS for the 2024-25 season, adopting a conservative stance due to the volatile nature of global dairy commodity prices at the start of the season. Synlait's farmer suppliers have received, on average, $0.28/kgMS above the base milk price for the past two seasons, and similar incentives are projected for the 2023-24 and 2024-25 seasons. The company commits to monitoring market movements and keeping suppliers informed.
Meanwhile, Taupo-based milk processor Miraka has set a 2024-25 season milk price of $8.42/kgMS. Miraka's chief executive, Karl Gradon, emphasized the company's dedication to paying the best milk price to its suppliers. Miraka will offer a base price of $8.25/kgMS, with farmers having the opportunity to earn additional premiums through the Te Ara Miraka farming excellence program. Since its inception in 2010, Miraka has paid over $21 million in premiums to its farmer suppliers.
