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2 July, Dairy Comment

By Paul Willows

This week is another week of declining prices for dairy commodities.

Prices of WMP on the SGX/NZX exchange have fallen 25% from their peak. Dairy merchants are very concerned about the outlook for demand.

China is sitting on large stocks of powder. Imported WMP and SMP are selling at auction well below import replacement. It is interesting to note that Chinese import margins have been negative for almost 10 months now- this is a clear signal that demand remains poor.

Historical analysis shows that dairy demand declines significantly during global recession. High frequency data shows a slowdown in demand across the major importers over the past two months.

Fluid milk production in US and EU has showed signs of improving in June, but we are very unlikely to reach levels seen 5 years ago. Global fluid milk supply will remain constrained despite high prices.

Local pool prices are now a premium to the NZX export market. Lets hope the processors can maintain the domestic premium’ for the next 12 months.

If you have any interest in selling or buying milk, please contact to discuss


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