The latest GDT auction has continued the train of recent results all heading in the wrong direction. Down overall by -2.6% cheddar led the fall at -10.2%. Fortunately Whole Milk Powder fell by a more modest -1.5%.
Overall, the GDT TWI is at the lowest point (in US$) since December 2020. WMP the main price driver for New Zealand farmers (it makes up about 66% of the weighted GDT average price) has had some more recent bleaker periods (January 2023) but as with the other products follows a very similar trend.
The latest actual prices are:
- Butter index down -3.0%, average price US$4,748/MT
- Cheddar index down -10.2%, average price US$4,052/MT
- SMP index down -3.5%, average price US$2,648/MT
- WMP index down -1.5%, average price US$3,228/MT
Commentary from Westpac’s Nathan Penny puts the reasons for the continued slide on the slower than expected upturn in the Chinese economy. However, he is confident that it is only a matter of time before China’s presence makes itself felt and prices turn around. Unfortunately, it is almost too late in the season for this to have a positive impact on the price for the 2022-23 season and Westpac has lowered its forecast by 35cents to $8.40. On the positive side their outlook for 2023-24 is still high at $10.00 per MS.
Of interest Nathan Penny points out that dairy exports going to China fell from 43% in November 2021 to around 30% currently showing just how much room both with increased volume and potential price upsides the China return will have.
Fonterra’s share price on the NZX which received a significant boost last week going from NZ$2.56 per share up to NZ$3.03 on the back of the 2023 interim results only took a minor blink with the latest GDT result, going down to NZ$2.97 today.
Novel idea
A novel idea (for now at least), a Chinese e-commerce company (Pinduoduo) has sponsored for the third time an annual competition the Smart Agriculture Competition, hoping to drive innovation and sustainability in China’s agricultural sector. This year the competition’s focus is on growing lettuces without soil and sunlight and more importantly be commercially viable.
Vertical farming is taking hold in China’s largest cities partly due to the logistical issues of getting fresh produce from the farm to the consumer and also because while it has approaching 19% of the worlds population it only has approximately 8.5% of the world’s arable land.
The competition has had success in the past with a previous strawberry growing process using an ‘intelligent decision strategy’ for growing strawberries, created by teams from past competitions has already been successfully applied to actual agricultural production in China’s southwestern Yunnan province.
And a local company is rolling out something similar here.
No longer novel?
Here in New Zealand what might have been considered novel once is now starting to become mainstream. New Zealand oat milk products have been coming onto the market via Sweden due to the lack of manufacturing facilities in New Zealand. Otis Oat Milk have now reported that they are working with Auckland company “Free Flo Manufacturing” to keep all the processing on shore. They expect products from the new facility to enter the market by Christmas.
Southland company “Functional Foods” who received a $6m grant from the government last year are still to begin building their oat milk plant. Currently they are waiting to get the required number of investors on board to meet the $60m cost. It seems the next plant based ‘milk’ off the blocks will be derived from pea, either as a stand-alone product or as an additive, giving the oat milk the necessary boost in proteins to better enable it to compete with the real stuff.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.