Global Dairy Trade: Farmers say markets point to strong opening price

Stabilising international numbers are pointing to a strong opening milk price within weeks, farmers say. Here are the latest commodity trends.

International dairy markets are pointing to a farmgate price stronger than $9 per kilo milk solids, dairy farmers say, with some calling on processors to aim higher as primary producers struggle with drought.

The headline figure in the latest Global Dairy Trade trading session posted a modest decrease of 0.9 per cent to sit at $US4589 ($A7113) per tonne.

The whole milk powder category hardly moved with a one per cent dip to $US4332 ($A6715) per tonne while skim milk powder softened by 0.7 per cent to $US2817 ($A) 4366 per tonne.

Australian Dairy Farmers president Ben Bennett said the GDT had posted a cumulative gain of more than 25 per cent this financial year while farmgate step ups had moved the needle by only two to three per cent.

“Step-ups been barely 10 per cent of the rate of the GDT. And the GDT is only one of the measures — there’s stronger domestic conditions, better Aussie dollar,” Mr Bennett said.

“You’ve got to compare apples with apples here. New Zealand is getting a farmgate price of $NZ10.50 at the moment — that’s $A9.70 in Australia — and we’ve got a more efficient market here, so if we’re going to compare apples with apples, then we should be getting a price over the $10 mark. But at least start with a strong $9 (per kilo milk solids), a strong $9 not a weak $9.”

The latest GDT results are the final trading session before processors across Australia are mandated to list their opening prices on June 2.

Under the federal government’s mandatory dairy code of conduct, all processors have to publicly list their offers on their respective websites by 2pm of deadline day.

Due to June 1 falling on a Sunday this year, the deadline day is rolled forward to June 2 by the Australian Competition and Consumer Commission.

Gippsland dairy farmer Chris Griffin said conditions both at home and abroad were looking more favourable for a strong opening price compared to 12 months ago.

“There’s growing confidence about a stronger opening price,” he said.

“Quite a few in the industry, including Michael Harvey from Rabobank, have suggested we’ll be looking at over $9 (per kilo milk solids).

Global Dairy Trade has risen by 25 per cent this financial year. PICTURE: ZOE PHILLIPS

No processor is yet to confirm a price ahead of the June 2 deadline, but in general commentary about the state of the market, Fonterra global ingredients president Richard Allen said the latest GDT session showed demand was heading in the right direction.

“I think last night’s GDT was another good sign that there is still good, strong demand out there,” he said. “Obviously it’s a very volatile world out there.

“It’s important we take this momentum going forward. July is where we start to see the new season volumes start to come on and the volumes increase from here sort of through the next few months. So good momentum going forward.”