Good news for farmers, as international dairy commodity prices rise

There's encouraging news for farmers with international dairy commodity prices rising for the first time in seven months.

Global dairy commodity prices lifted 2.2 percent overall at the December 4 Global Dairy Trade (GDT) event. 

This is the first increase since prices started their decline in May 2018, with prices increasing for all commodities except cheddar.

The whole milk powder (WMP) price index was up 2.5 percent, while regular grade WMP to ship in February was also up 2.5 percent on the November 20 auction

NZX Dairy Data and Insights Analyst, Amy Castleton said the result was in line with expectations for WMP.

"There was likely increased demand for WMP given the lower volumes on offer compared with the previous event," she said.

"WMP offer volumes are coming back off their peak at the previous GDT event which is in line with normal seasonal trends," said Ms Castleton.

Price indices for anhydrous milkfat (AMF) and butter increased 3.9 percent and 2.7 percent respectively. 

Regular grade AMF and unsalted butter to ship in February lifted 3.9 percent and 4.1 percent.

Ms Castleton said the derivatives market had expected lifts for these grades and contracts of each of these products. 

"Compared with the previous GDT event there was slightly more AMF sold, but less butter," she said.

"Last week Fonterra removed 2000t each of butter and AMF from its offer volumes on the GDT platform over the next few months," said Ms Castleton.

The skim milk powder (SMP) index was fairly stable (+0.3 percent) overall, while medium heat SMP for February shipping was unchanged on the previous event. 

The availability of global stocks has keep SMP prices steady, however there is still some demand for fresh product.