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Summary
- Dairy prices moving north, the fourth continuous rise, shows the demand is on the rise again, mainly from China.
- Analysts pleasantly surprised as they did not expect this increase.
- April 2020 auction saw a fall in the prices due to the dip taking a cue from the fall in oil prices.
Dairy products prices reached their highest in 12 months in the global auction held this week. This was the fourth consecutive rise in all dairy products, up by almost 3.9%, amounting to US$33306 per metric tonne (MT).
This came as a pleasant surprise for the analysts as they had not expected a rise this time, after three consecutive increases.
The most important product of New Zealand, whole milk powder, went up by 3.1%. This increase was the highest in the last few months. But the major gainers were lactose, which saw an increase of 7.4% to US$ 1099 per MT, butter, which was up by 7.2 % to US$4526 a tonne, and anhydrous milk fat, which was up 5.5% to US$ 4604 per MT. Skim milk power jumped 4.1% to US$3044 per MT.
The average price for all commodities was US$3420 per MT as against US$3317per MT in the last auction of mid-December.
Also read: NZ dairy farmers can rejoice as dairy auction prices jump by 4.3 per cent
Image source: Shutterstock
The milk prices have been moving north since the start of the year, giving the farmers a reason to cheer. While farmers benefit directly, the rural communities around the farming industry also get benefited. The price rise impact will flow down to the larger communities.
Fonterra had earlier predicted the price rise but didn’t expect it would be that steep. The reason for the continuous rise in dairy prices is being pegged on increasing demand from China. The demand in China, especially of whole milk powder, is growing as the country is on the path to recovery from the impact of COVID-19.
It may be recalled that the price of whole milk powder was up more than 4% in the last auction, which was held on December 2, 2020.
In April 2020 auction, the dairy prices had dipped, reversing all gains in the previous auction. At that time, the price of whole milk powder had dropped 3.9%, while the overall drop was to the tune of 4.1%. Prices of all and milk-based products saw a decline, but lactose and cheddar cheese gained 12 and 1.9% each.
It was a very weak auction and since then, the prices have risen beyond expectations.
