More gloomy export news – dairy dive continues

The dive in dairy prices continues, with prices in the overnight global auction falling a further 9.3%.

Radio New Zealand reports: New price shock for dairy products

The benchmark price of whole milk powder took a dive of 10.3 percent to $US1590 per tonne.

The biggest drop in the Global Dairy Trade (GDT) auction was a 14.4 percent tumble in the price of skimmed milk powder.

AgriHQ analyst Susan Kilsby yesterday said increased volumes of whole milk powder being offered for auction were likely to keep prices low.

“Volumes for whole milk powder are up by 75 percent, compared with the last auction, so there’s a lot more product to move through, and certainly a lot of the product didn’t even move off its starting price at the last auction,” said Ms Kilsby.

Strong growth in milk production in all dairy export regions – the EU, US, New Zealand and Australia – was also depressing prices.

That’s a huge increase in volumes, so coupled with softening demand it’s no wonder prices are falling.

The boom will have encouraged more dairying, but large increases in production are happening after the market has crashed, making the problems worse.

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2 Comments

  1. The best thing about this is all the marginal conversions in NZ will be really struggling and will be driven out of business.

    Any fool who thought 6 dollars plus was the new reality for milk payout is getting what they deserve. You only had to look at the long run payout graph and understand a smidge of Macroeconomics to know 6 dollar plus payouts wouldn’t last.

    NZ Dairy will bounce back once the chancers and fools are flushed out by the current down turn. Its a solid business when viewed on 20 year event horizons

    Invest for the long run opportunity, speculate on the short term trend…. and the current situation reflects that

    Reply
  2. Dairy farms to Paddy Fields

     /  5th August 2015

    Maybe Fonterra should take heed…….

    “When prosperity comes, do not use all of it”

    (Confucius

    Reply

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