NZ skim milk market wipes out 'inexplicable premium' to Europe


Skim milk powder prices in New Zealand took to nearly one-quarter their plunge over the last two GlobalDairyTrade auctions, wiping out the premium of Oceanic prices to those in other markets.

But whole milk powder prices actually stabilised, recovering from the multi-month lows plumbed in the previous action.

Skim milk prices at the GlobalDairyTrade auction, which is run by New Zealand milk giant Fonterra, fell by 10.1% at the latest event, to an eight-month low of $1,948 a tonne.

The drop extends the losses from the previous auction, held two weeks ago, when price fell by over 15%.

Premium to Europe wiped out

The drop in New Zealand skim milk prices has closed the gap between prices there, and the prices seen in European and US markets, described earlier this month as an "inexplicable premium".

As of last week, skim milk powder prices in Europe stood at $2,052 a tonne, according to the European Commission. And prices in the US were even lower, at $1,782 a tonne.

In comparison, at the start of the month, skim milk powder prices in New Zealand stood $502 a tonne higher than European levels, and $768 a tonne above US levels.

Whole milk prices rise at auction, despite falling futures market

Despite the sharp fall in skim milk prices, benchmark whole milk powder prices actually rose a touch in the latest GlobalDairyTrade auction, up 2.9% from the four-and-a-half month lows of the previous event.

This was better than expected, given that the whole milk futures market in New Zealand was pointing to further falls, of around 5%.

The premium of whole milk powder to skim milk powder prices at the auction has risen to $897 a tonne, from just $642 a tonne a month ago.

The GlobalDairyTrade index as a whole rose 1.7%.


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