New Zealand’s Global Dairy Trade price index has been declining steadily since July as evidence mounts that Kiwi farmers are enjoying a bumper season.
Although it’s early days Dairy Australia commercial research and analysis manager Norman Repacholi said all eyes were on Kiwi production given it and the European Union were the world’s biggest exporters.
In its latest data dump the Dairy Companies Association of New Zealand reported Kiwi farmers had pumped out 358,459 tonnes of milk solids in the September quarter, compared to 340,299 tonnes for the same period last year.
While it may be viewed as a relatively small surge, it’s enough to drive the GDT price down to October 2016 levels.
“It’s still early (in the season), but even this slight increase in supply is having an impact,” Mr Repacholi said.
He said the market had moved into a bearish mode, exacerbated by the GDT auction policy of opening bids at 15 per cent below the last close.
“We still have trade policy impacts and it also depends what happens with the Australian dollar. As it weakens (against the $US) it could offset some market losses,” Mr Repacholi said.
If the season continues on the current trajectory New Zealand farmers could get close to the 1.88m tonnes they produced in 2014.
