Dairy prices continue to fall

The latest auction has resulted in another large drop in milk dairy prices. The continued slide will put a lot of financial  pressure on many dairy farmers, and on the whole New Zealand economy.

NZ Herald reports in Dairy prices plunge 10.7 per cent at latest auction:

Dairy prices fell sharply at the latest GlobalDairyTrade auction, the GDT price index dropping by 10.7 per cent from the last sale a fortnight ago and with wholemilk powder prices leading the way.

The price of whole milk powder – which is responsible for about 75 per cent of Fonterra’s farmgate milk price – fell by 13.1 per cent to US$1,848 a tonne.

Price declines were across all but one of the products offered for sale.

Fonterra’s current milk price forecast of $5.25 per kg of milksolids for 2015/16 is based on GDT prices reaching about US$3500 a tonne towards the end of this season.

That looks a long way off.

Prices, after a steep decline in 2014, bounced back in February this year but have been falling ever since.

Oversupply, slack demand from the world’s biggest dairy importer – China – Russia’s import ban, the removal of dairy production quotas in Europe and higher production arising from cheaper feed costs have all acted to depress dairy prices.

The latest auction summary from GlobalDairyTrade:

GlobalDairyTrade15-07-15

The ten year price index doesn’t look flash either with current prices heading to a decade low.

GlobalDairyTrade10yrto1015

Leave a comment

6 Comments

  1. Paddy Field (Irish)

     /  16th July 2015

    No wurries!!

    There’s more than a Trillion dollars of hot money out of China looking for a home…..can’t wait for Phil to release the list of farm buyers 😦

    Reply
  2. More evidence that ‘team Key’s’ neo-liberal (leave it too the market) agenda is FAILING miserably !
    I’m guessing even his favoured status rich MATES are starting to see it ? 😦

    Whats the next thing ‘on the auction block..’ from teflon John ? 🙂

    Reply
    • Alan Wilkinson

       /  16th July 2015

      Yes Zedd. Mao was so much more successful (at starving his own people) until his successors decided to allow markets to flourish. Honestly, the utter rubbish you believe.

      Reply
  3. gunangler

     /  16th July 2015

    Come on .. the only people who could not see the train crash coming were the banks in their desperation to lend cheap overseas money and the greedy farmers who borrowed up to hilt knowing full well like all commodities it would fall again….They hoped they would make it work and sell out with a bucket load of cash before the inevitable crash ( I know several who undertook conversions and that was their plan) .. A farm has to be run like a business and if your product or service start to loose money you go out of business….. That will start to happen in a big way soon and who will be left to clean up the mess..polluted land and waterways…. The poor old suffering ratepayers while a number of those who got out early and banked the millions will be sunning it up in the islands…
    I assume all the farms that go broke will end up in foreign bank hands…. lets forget about the Chinese and worry about the huge land holdings foreign banks have by virtue of their mortgages..

    Reply
  4. @AW

    You obviously have some funny ideas about ‘my beliefs’ BUT keep on guessing :/

    Reply

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