January 4, 2023

 

Global dairy prices drop at start of 2023

Dairy prices at the first global dairy auction of the year declined 2.8% to US$3365 a tonne, following a 3.9% drop at the last auction in late 2022, RNZ News reported.

 

The price of wholemilk powder, the most popular ingredient on the auction platform, fell 1.4% to US$3208 per tonne.

 

Dairy prices have been generally falling since reaching record highs in March 2022, owing to oversupply and weaker demand.

 

Stuart Davison, NZX dairy insights manager, said that cost of living pressures were influencing people's purchasing habits.

 

Davison said those purchasing goods through the auction platform were very concerned that consumers would eventually want less dairy.

 

He said they are still in that buying pattern that traders refer to as "hand to mouth," where purchasers are not willing to accept large volumes of product.

 

Davison also said the auction showed how the macroeconomic environment around the world was having an impact on the dairy market just like it was for other commodities and markets.

 

This auction also indicates that dairy producers will experience more declines in 2023, with the macroeconomic situation likely to deteriorate before improving.

 

According to Davison, the most recent outcome of the international dairy auction threatens Fonterra's forecast of milk prices for the 2022–2023 dairy season.

 

Fonterra's forecast range currently has a midpoint of NZD 9 (~US$5.68; NZD 1 = US$0.63) per kg of milk solids.

 

Davison expects that the initial forecast for milk prices would be lower than anticipated for the upcoming 2023–2024 dairy season.

 

-      RNZ News