In an unexpected result, today's globaldairytrade auction has posted a strong recovery, ending a string of price declines of the previous three auctions.
Prices rose 13.5% from the previous auction on May 15, 2012 with the trade weighted index rising to 950 from 837.
The big rise was for skim milk powders, which rose 21.3%. Anhydrous milk fats rose 24.4% and rennett-casein rose 19.6%.
There were more modest rises for whole milk powders wich saw an increase of 8.5% and cheddar cheese of 9.4%.
Volumes offered for sale were seasonally lower, with about 75% of the volumes of the previous auction.
There were 106 winning bidders over 16 rounds, the longest auction since November 2011.
There were 170 participating bidders, the highest since December 6, 2011. The number of qualified bidders rose to 649 from 635.
There has been only muted reaction to these improvements on currency markets.
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11 Comments
The result should probably better be described as a strong response to a sharp reduction in short term supply (Contract2). The result was not unexpected by anyone who understood the preceding statement.
I don't buy the seasonally lower volume bit either - volumes should now be increasing as this auction's delivery dates include the peak milk production period (Contracts 3-6 are for delivery September to December).
But what does a 43.6% increase in Contract2 AMF achieve in the medium term? Or 28.4% for Contract2 SMP? Or 19.6% for Contract2 Casein?
And even that sharp reduction in short term supply only pushed the average sale price up by 10.7%.
This is as disorderly marketing as I can imagine. Desperate times perhpas?
But the MSM still seem to buy the intended message hook, line and sinker - despite the supply manipulation being discussed on this site yesterday.
gDT price increases by Contract:
Fishy maybe, Mike, but I'm getting a sour milk taste.....a bit of orchestration, timed perfectly to appease any TAF malcontents....whatever the case go look at the graph I put up on 90 at 9, it's on the link provided....tell me what you see......bounce..? bounce my ass that auction had a rocket launcher loaded into it.
As I said, smells bad...real bad...almost insultingly bad.
Mike should compare these two patterns of delivery dates for the last two auctions:
http://www.nzxfutures.com/system/dairy_reports/reports/295/original/The…
http://nzx.us2.list-manage.com/track/click?u=b8a03199b83b7d3f31d0f2086&…
The spreadsheet gives some further detail down to products and across periods:
http://www.globaldairytrade.info/Results/HistoricalData.aspx
A briefing note on how the GDT-TWITM is calculated is available on request by sending an email to help@globaldairytrade.info.Maybe BH can publish the detail :)
Quick flick as noted above, is the volume story.
There were 30 less winning bidders (buyers) than last sale.
When looking at prior years, remember the number of auctions per month has increased between 2010 and 2011.
From the Oz scap book:
http://www.weeklytimesnow.com.au/article/2012/05/30/488551_dairy.html
http://www.smh.com.au/business/cheese-maker-declares-downgrade-on-softe…
http://sl.farmonline.com.au/news/state/dairy/general/fonterra-seeks-mor…
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"Fonterra has been in the Australian market for a long time now and we have built up a strong track record in pricing. Over the past three years, we have delivered a consistently strong farmgate milk price, even during times of downturn in the market.
"Next is the wider package of incentives that goes around that. We provide compelling incentives and rebates in a range of areas, with a focus on growth and production. So farmers who are seeking to join us and keep growing will be rewarded for that."
Mr Bromell said Fonterra's mix of products minimised risk in the volatile global market.
"We have multi-site manufacturing and we have an extremely well-regarded and balanced mix of popular brands, quality export customers, and domestic ingredients customers as well," he said.
"Balanced with where we sell product, this helps us minimise risk and overexposure and this is an important thing for suppliers to consider, particularly when markets are facing headwinds as they are this season."
Note to Self: so this is risk minimised
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