After 4 bumper Global Dairy Trade auctions here’s what to expect tomorrow

The rate of increase of prices at Fonterra’s Global Dairy Trade auction is set to fall at its next auction set to take place tomorrow.

According to New Zealand bank ASB, current futers markets point to a flat or small lift in milk powder prices at tomorrow’s auction.

Dairy prices rose at the last Global Dairy Trade auction for the fourth time in a row. Key whole milk powder prices rose 12.9%, with an average price of US$2,824/MT.

ASB bank expects prices for whole milk and skim milk to press comfortably above $3,000/MT over the New Zealand dairy season.

According to ICOS’s latest dairy trade commentry there are now reasonably consistent signs of a strengthening in dairy markets.

It says with the EEX index for butter and SMP both rising steadily across the past month.

Butter quotes, at €2872 are running at over €150 up on the month and the SMP quoted price at €1762, although still close to intervention level, is running around €100 up on last month.

Those prices would value milk at around 22-23c per litre, still well below current milk price levels, but moving slowly upwards none-the-less, it says.

ICOS comment that this relative strength is undoubtedly down to buyers concern that milk supply growth is slowing down, as it appears to be across all the major regions.

The post quota supply growth in the EU, which came from “2nd tier” nations, such as Ireland, Poland, the UK and the Netherlands, is expected to tail off as the year progresses, and, crucially, the big producer nations such as France and Germany are seeing production declines.

The US is expected to see around only 1.4% growth for the year, and New Zealand, is also in decline, it cites.

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