Global Dairy Trade prices fell 1.3% overnight, a result Westpac says was weaker than expected.
The Global Dairy Trade index is a bimonthly auction which connects buyers and sellers of dairy from around the world and helps determine a fair market price.
Westpac senior agri-economist Nathan Penny said, despite the fall, prices remained very high.
“From here, we expect prices to remain strong on the fact that global dairy supply remains very tight,” Penny said.
Easing Covid-19 restrictions in China could give prices a further boost at some stage, he said.
In early May the index suffered the biggest fall since 2015 with prices dropping 8.5%.
On May 17 it fell a further 2.2% before lifting 1.5% on June 7.
Overnight three out of the five products on offer fell, with cheddar prices posting the largest fall, down 9%.
Penny said the mixed nature of the most recent result suggested prices were in a holding pattern.
“At the last auction the market factored in better Covid news in terms of easing restrictions in China.”
“But with no fresh news to digest on that front, the price moves reflected changes in product mix rather than any underlying factors.”
The result was consistent with Westpac’s farmgate milk price forecasts, which stood at $9.30/kg and $9.25/kg for 2021/22 and 2022/23, respectively.
