NZ: Headline dairy auction result masked troubling softness elsewhere - ANZ

Research Team at ANZ, suggests that while the headline dairy auction result held up (-0.4%), it masked troubling softness elsewhere.

Key Quotes

“The main price support was for product to be delivered in August with WMP (+15%), AMF (+11%), AU SMP (+9%) and butter (+6%) all up substantially. This kind of near-term price support would suggest demand from a small number of buyers for short-term requirements. It was a different story further out the curve where the likes of WMP prices dropped 4-6% across the other contract periods.

All-up prices remain precariously placed and combined with NZD resilience this means Fonterra’s starting milk price forecast in May of $4.25/kg MS looks optimistic at this stage. If recent auction prices were to persist then the milk price will see no improvement from the season that has just finished.”