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World dairy prices plunged into this week's GlobalDairyTrade auction, dropping to a six-month low.
The overall price index was down 5%, the largest decline since last March. Prices for whole milk powder were down 7.3%, a much sharper drop than expected by the futures markets.
Prices for skimmed milk powder also decreased, falling by 4.6% and those of butter by 4%. The index has now dropped 7.4% over the past three years
The result has clearly put pressure on Fonterra's $ 7 Fonterra milk price forecast for 2018-2019, said Anne Boniface. senior economist of Westpac
. The increase in nervousness about the impact of trade wars on global growth prospects could have played a role in the coming months, she said.
Prices of dairy products could be volatile in bi-weekly auctions. the bank was inclined to treat the outcome of this week's prices with some degree of caution. However, she had warned of the prospect of a drop in dairy prices due to slowing growth in China for some time, she said.
Early indications of New Zealand dairy production seem favorable. For the record, early season pasture conditions in many parts of the country were good
It would depend largely on how the weather rose in the spring. In addition, the effect of Mycoplasma bovis, the increase in environmental regulations and incentives to reduce the use of palm kernel extract, all that is suggested could be a growth too faster than in the past.
Nathan Penny said the bank was maintaining its forecast of $ 6.50. He was closely monitoring the evolution of trade between the United States and China and the potential impact on the dairy markets.
Ironically, New Zealand should benefit from the increase in Chinese tariffs on US dairy products. These tariffs would make New Zealand dairy products cheap relative to their US counterparts.
In return, China would likely increase its demand for New Zealand dairy products, which would drive up prices.
According to him, rising trade tensions and their potential effects on demand for dairy products pushed the ANZ commodity price index down 1% in June after five consecutive monthly increases. Prices fell in all major categories, with the exception of seafood, which was stable, and wool prices continued to recover. Prices for dairy products fell 1% to almost 1.5%, up 0.8% from one month to the next.
Skimmed milk powder was the only component milk production to increase by 2.4% compared to the previous month.
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