June 2010
Butter markets are described as easing, but stocks tight. Prices for anhydrous milk fat have risen in auction to US$5324/tonne. Most production is committed at this stage, with seasonal production finished, making contractual obligations difficult. Buttermilk powder will be added to the offers list on Fonterra's auction site from August 3rd. NZ price risen with currency and demand $6024/tonne.
Skim milk powder markets are committed but pricing is easing with supply issues now influenced by the Northern Hemisphere season and the release of European intervention stocks. Prices fell at auction to $US3462/t. NZ price $4760/tonne
Whole milk powder prices are easing now with supplies close to balance and seasonal demand moves to other countries. Fonterra announced that they will double offers at auction which will be a two week turnaround. Latest prices fell at auction to US$3790/tonne. NZ price following the market falls to $55727/tonne
Cheddar The cheese prices are easing. US price $3950/t Stock is in balance with little spare stock. Negotiations have started for product contracts in the new season. NZ price $5875/tonne.
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The easing of the auction prices for dairy commodities seemed to herald a steadier week for the currencies. We were promised volatility and certainly the last month we have seen that in exchange rates, and trading in this environment cannot be easy.
Winter has arrived with a vengeance with flooding and cold conditions in many areas, testing out the early feed regimes. It was reported less cows are seen on the roads walking to grazing, with some suggesting amalgamations, have made this more an in house operation. However in many dry land areas this winter cow grazing enterprise is a very important part of cash strapped sheep and beef operations. Farmers have learnt a lot from dairy operators in measuring volumes and quality of feeds, and will be able to use these new skills in improving their enterprises.
The Crafar farms sale now has Landcorp’s and the Superannuation fund’s interest, as public opinion favours retaining farm land for NZ interests. Reports suggest that some of the new dairy conversions will come from cropping farmers, disillusioned with poor prices, high costs and cash flow pressures.
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