Dairy price jump

The latest Global Dairy Trade auction has seen average prices jump by 11.4% to the highest level since July 2014.


Prices have been up and down quite a bit so it’s not possible to know if this is a jump as part of a positive trend or a bit of a blip.


What dairy prices do could have a significant impact on next year’s election. A dairy recovery is likely to help National as long as the rest of the economy stays good.

Dairy prices rise again

Dairy prices continue to improve, modestly. In fact they have mostly risen through this year.

The latest Global Dairy Trade index is up another 7.7% which adds to a promising trend. This is said to be in part due to a tightening of global supplies.


Ten year trends:




Slight recovery of dairy prices

Dairy prices are up 3.8% overall in the latest global auction, the second small rise in a row, but this is just a slight recovery after tough times as this trend chart shows


A significant recovery in dairy prices isn’t expected this year.


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:


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