prices, dairy, WMP
Dairy prices decreased

 

Much of Australia has been hot and dry. Only scattered areas received some rain last week. In Northern Australia, new season hay is limited. This has led to hay from southern areas moving north to meet demand. High feed costs are of increasing concern among dairy producers and herd culling is possible to reduce the need to purchase feed.

A number of lawsuits concerning rights to groundwater have been working their way. Some farmers situated above natural aquifers have been limited as to how much water can be pumped and used for cattle and irrigation.

New Zealand milk production peaked in October and increased +5.8% from October 2017. The cumulative increase for June-October period was +5.8%. Extraordinarily heavy rain on the West Coast has caused some localized disruption of collection and transportation of milk.

Prices of dairy commodities in Oceania (Butter, Cheese, WMP and SMP) are lower compared to two weeks ago.

Production of Cheddar is active in both New Zealand and Australia.

Production of Butter is strong in New Zealand, but weaker in Australia, due to low milk production and milk demand needed for making Cheese.

WMP production is active as manufacturers keep production at levels needed to fill contracts. Customers believe that WMP will continue to be easily available in coming months.

SMP production, while decently profitable, is expected to be less attractive to manufacturers than WMP and Cheese. Lower prices in the EU tend to hang over Oceania prices.

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