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1 Apr 2015
New Zealand: Another dairy shocker - ANZ
FXStreet (Bali) - The result in Fonterra’s GlobalDairyTrade auction earlier today suggests a payout of NZD4.50-4.70 this year, notes ANZ.
Key Quotes
"The average winning price in Fonterra’s GlobalDairyTrade auction overnight fell a further 10.8%. The fall was led by whole milk powder (-13.3%), but prices for every product sold fell at least 5%. Skim milk powder was down 9.9%."
"Prices have now unwound much of their early-2015 bounce, sitting at USD2,746/MT versus a low of USD2,513 in early December and a high of USD3,374 just a month ago."
"With milk powder making up the bulk of NZ’s product mix, the result suggests a payout of NZD4.50-4.70 this year."
"The largest price falls were generally seen in the longer-dated contracts, up to 6 months out – into the new season."
"While these prices remain higher than those for the end of this season, the curve has flattened, suggesting less price recovery is now anticipated – not boding well for next year’s payout."
"The NZD response was negligible for two reasons: firstly, the weakness was clearly signalled by NZD dairy futures prices following Fonterra’s announcement of higher volumes, and second, US data disappointed overnight."
"But it is certainly clear that if New Zealand’s main commodity price is on its way south, something’s gotta give."
Key Quotes
"The average winning price in Fonterra’s GlobalDairyTrade auction overnight fell a further 10.8%. The fall was led by whole milk powder (-13.3%), but prices for every product sold fell at least 5%. Skim milk powder was down 9.9%."
"Prices have now unwound much of their early-2015 bounce, sitting at USD2,746/MT versus a low of USD2,513 in early December and a high of USD3,374 just a month ago."
"With milk powder making up the bulk of NZ’s product mix, the result suggests a payout of NZD4.50-4.70 this year."
"The largest price falls were generally seen in the longer-dated contracts, up to 6 months out – into the new season."
"While these prices remain higher than those for the end of this season, the curve has flattened, suggesting less price recovery is now anticipated – not boding well for next year’s payout."
"The NZD response was negligible for two reasons: firstly, the weakness was clearly signalled by NZD dairy futures prices following Fonterra’s announcement of higher volumes, and second, US data disappointed overnight."
"But it is certainly clear that if New Zealand’s main commodity price is on its way south, something’s gotta give."