Dairy prices extended gains at a second successive GlobalDairyTrade auction, helped by further evidence of the slowdown in New Zealand production, and a reduction in product being made available for purchase.
Prices at the GlobalDairyTrade auction, which is run by New Zealand dairy giant Fonterra, rose 1.9% from the previous auction, held two weeks ago.
The price of milk powder, which accounts for the bulk of volumes sold, was up by 1.8%.
The modest uptick in prices was helped by increasing evidence that the low milk price is starting to choke-off production.
Supply squeeze
Last week, Fonterra announced that it would be reducing the amount of whole milk powder it made available over the next couple of auctions.
“In total, Fonterra’s whole milk powder volume offer forecast has been reduced by 14,300 tonnes over the next 12 months,” the co-op said.
“This reflects lower forecast New Zealand milk collection, and continued successful contracting through other sales channels.”
Cattle kill-off
Data from Statistics New Zealand, released on Tuesday, confirmed expectations of falling cattle numbers.
The New Zealand herd was seen at 6.4m head in June of this year, down 300,000 head year on year. This is the first drop in New Zealand dairy cattle numbers since 2005.
The cattle kill-off is being driven by very low profitability.
This week the New Zealand central bank estimated that four out of five dairy farmers in the country are operating at a loss.
The bank noted that the lack of profitability comes despite a falling exchange rate, which supports receipts from overseas exports.
Falling production
Fonterra’s latest dairy update shows that the fall in New Zealand milk production is accelerating.
In November, Fonterra’s New Zealand milk production was down 4% year-on-year, after declining 3% in October.
And Fonterra forecasts prices over the 2015-16 season down 6% overall, indicating leaner times are to come.
“This reflects a change in farming systems such as decreased stocking rates and less supplementary feeding as farmers respond to the low milk price environment,” Fonterra said.
And Fonterra last week said it was sticking with a forecast that its farmer owners will receive NZ$4.60 per kilogramme of milk solids in 2015-16, a small rise year on year, and well above the NZ$3.85 per kilogramme of milk solids forecast the earlier in the season.
Rising demand
There was also some good news on demand, as China, the world’s biggest dairy importer, saw shipments rise for the fourth month in a row.
Chinese dairy imports were up 12% year-on-year in October.
In the year from January, imports are still down 13%, reflecting that sharp fall off of demand over 2014.
- See more at: http://ingredientnews.com/articles/dairy-prices-firm-helped-by-new-zealand-herd-shrinkage/#sthash.6ueFZ3qS.dpufDairy prices extended gains at a second successive GlobalDairyTrade auction, helped by further evidence of the slowdown in New Zealand production, and a reduction in product being made available for purchase.
Prices at the GlobalDairyTrade auction, which is run by New Zealand dairy giant Fonterra, rose 1.9% from the previous auction, held two weeks ago.
The price of milk powder, which accounts for the bulk of volumes sold, was up by 1.8%.
The modest uptick in prices was helped by increasing evidence that the low milk price is starting to choke-off production.
Supply squeeze
Last week, Fonterra announced that it would be reducing the amount of whole milk powder it made available over the next couple of auctions.
“In total, Fonterra’s whole milk powder volume offer forecast has been reduced by 14,300 tonnes over the next 12 months,” the co-op said.
“This reflects lower forecast New Zealand milk collection, and continued successful contracting through other sales channels.”
Cattle kill-off
Data from Statistics New Zealand, released on Tuesday, confirmed expectations of falling cattle numbers.
The New Zealand herd was seen at 6.4m head in June of this year, down 300,000 head year on year. This is the first drop in New Zealand dairy cattle numbers since 2005.
The cattle kill-off is being driven by very low profitability.
This week the New Zealand central bank estimated that four out of five dairy farmers in the country are operating at a loss.
The bank noted that the lack of profitability comes despite a falling exchange rate, which supports receipts from overseas exports.
Falling production
Fonterra’s latest dairy update shows that the fall in New Zealand milk production is accelerating.
In November, Fonterra’s New Zealand milk production was down 4% year-on-year, after declining 3% in October.
And Fonterra forecasts prices over the 2015-16 season down 6% overall, indicating leaner times are to come.
“This reflects a change in farming systems such as decreased stocking rates and less supplementary feeding as farmers respond to the low milk price environment,” Fonterra said.
And Fonterra last week said it was sticking with a forecast that its farmer owners will receive NZ$4.60 per kilogramme of milk solids in 2015-16, a small rise year on year, and well above the NZ$3.85 per kilogramme of milk solids forecast the earlier in the season.
Rising demand
There was also some good news on demand, as China, the world’s biggest dairy importer, saw shipments rise for the fourth month in a row.
Chinese dairy imports were up 12% year-on-year in October.
In the year from January, imports are still down 13%, reflecting that sharp fall off of demand over 2014.
- See more at: http://ingredientnews.com/articles/dairy-prices-firm-helped-by-new-zealand-herd-shrinkage/#sthash.6ueFZ3qS.dpufPrices at the GlobalDairyTrade auction, which is run by New Zealand dairy giant Fonterra, rose 1.9% from the previous auction, held two weeks ago.
The price of milk powder, which accounts for the bulk of volumes sold, was up by 1.8%.
The modest uptick in prices was helped by increasing evidence that the low milk price is starting to choke-off production.
Supply squeeze
Last week, Fonterra announced that it would be reducing the amount of whole milk powder it made available over the next couple of auctions.
“In total, Fonterra’s whole milk powder volume offer forecast has been reduced by 14,300 tonnes over the next 12 months,” the co-op said.
“This reflects lower forecast New Zealand milk collection, and continued successful contracting through other sales channels.”
Cattle kill-off
Data from Statistics New Zealand, released on Tuesday, confirmed expectations of falling cattle numbers.
The New Zealand herd was seen at 6.4m head in June of this year, down 300,000 head year on year. This is the first drop in New Zealand dairy cattle numbers since 2005.
The cattle kill-off is being driven by very low profitability.
This week the New Zealand central bank estimated that four out of five dairy farmers in the country are operating at a loss.
The bank noted that the lack of profitability comes despite a falling exchange rate, which supports receipts from overseas exports.
Falling production
Fonterra’s latest dairy update shows that the fall in New Zealand milk production is accelerating.
In November, Fonterra’s New Zealand milk production was down 4% year-on-year, after declining 3% in October.
And Fonterra forecasts prices over the 2015-16 season down 6% overall, indicating leaner times are to come.
“This reflects a change in farming systems such as decreased stocking rates and less supplementary feeding as farmers respond to the low milk price environment,” Fonterra said.
And Fonterra last week said it was sticking with a forecast that its farmer owners will receive NZ$4.60 per kilogramme of milk solids in 2015-16, a small rise year on year, and well above the NZ$3.85 per kilogramme of milk solids forecast the earlier in the season.
Rising demand
There was also some good news on demand, as China, the world’s biggest dairy importer, saw shipments rise for the fourth month in a row.
Chinese dairy imports were up 12% year-on-year in October.
In the year from January, imports are still down 13%, reflecting that sharp fall off of demand over 2014.
