Key milestone for milk powder prices breached this week

Whole milk powder (WMP) futures prices broke through the US$3,000/MT barrier at the latest NZX futures market.

The latest trading figures suggest that October WMP contracts will trade at US$3,050/MT, with WMP futures prices remaining ahead of this barrier until July.

Given these positive indications from the NZX futures, it could bode well for another positive Global Dairy Trade next week, which would be a fourth consecutive positive auction.

Dairy product prices rose 7.7% at the last auction, with the main movers being anhydrous milk fat (AMF) (+15.4%) butter (+14.9%) and skimmed milk powder (SMP) (+10%).

Along with the rises in the Global Dairy Trade auctions, milk price rises are being seen in the major milk producing countries.

In New Zealand, both Fonterra and Westland, raised their forecast farmgate prices for the 2016/17 season (ending May 2017).

Fonterra’s forecast is up 12% to approximately 22.6c/L, while Westland’s has risen 4% to around 20-21c/L, according to AHDB Dairy.

In the Netherlands, FrieslandCampina increased its guaranteed milk price for raw supplies of milk for September by €1.25/kg.

This increase will bring the milk price for September supplies to €26.25/100kg or 25.37c/L in Irish constituents.

“The milk supply in the EU is gradually decreasing with a more or less stable demand,” a statement from FrieslandCampina said.

Following days of intense protest, French Processor Lactalis has agreed a milk price rise with its dairy farmer suppliers.

The processor is expected to ensure an average of around 27.5c/L is paid for milk supplied during 2016.

Milk price rises have also been seen in Ireland for August, with Glanbia, Kerry and Lakeland Dairies all increasing their milk prices for supplies with prices averaging at 25c/L.