GDT #195

The chart from CIP below tells the story of the last 6 auctions – an extended period of low volatility.

Readers will recall, however, that the last 2 auctions have disappointed with slightly negative outcomes, despite robust markets leading into the auction and expectations of a 3%+ price rise in GDT.

This week that trend remains in place, with futures markets continuing to suggest well supported markets across WMP (+3%), butter (+2.5%), and AMF (+2.5%) and SMP (+1.5%).

GDT194 another go

 Ahead of the last auction I was somewhat confidently suggesting a 3% - 5% lift in the WMP futures and a robust result across the board.  The -1.6% result in the GDT auction and a modest +1.3% uptick in WMP was therefore disappointing. In some respects, this was even more so, given that my optimism was partly predicated on an expectation of interest from Chinese buyers which did indeed eventuate – as shown in the GDT / CIP chart below. Chinese buying represented 44% of the auction volume.

Environment plans to the fore.

 Environmental Farm Plans must be part of Farm Business plans.

GDT 193 interesting

At the time of the last auction I identified that it was hard to get excited with either the price action or the prospects for the auction (#192) given that +/- 1% looked to be likely (and indeed the outcome conformed to these expectations).

MyFarm Business service launched

As a result of growing demand from farmers outside the MyFarm group of dairy farm syndicates, MyFarm has decided to make our farm business management services available to all New Zealand dairy farmers.

GDT #192

The GDT auctions this calendar year have (relative to the experience of prior years) shown relatively low levels of volatility. In fact, as shown below, only one auction amongst the last 12 has shown a move of +/- 4% and the last 3 auctions have seen the GDT index move less than +/-1%.

How do you like them apples

The "Investors guide to the New Zealand produce industry" produced recently by Tim Morris and team represents an excellent snapshot of just how well the New Zealand permanent crop sector is doing. The excellent climate, particularly for fruit production, has combined with innovation in products/varieties, production systems, food assurance systems and product presentation and packaging to deliver on the horticulture sectors potential.

GDT 190 / dairy forecasts

Market Recap:

We are now several weeks into the new season and final price announcements for the 2016/17 are being made. It is too early for any commentary on the production side of the ledger! Price discussion this week was “headlined” by Synlait’s revised $6.15/kgMS 2016/17 final FGMP (down from a previously forecast $6.25/kgMS) with an average 14 cent premium across a number of “value add” categories including A2 milk.

Auction #189

It has been 3 weeks since the last auction and there has been a reasonable amount happening in the market:

GDT 188: Weak but good

The last auction result (+3.6%) was right at the top end of my expectations (+/-3%) and WMP was +5.2% but there has been limited follow through since in the futures market.

The result reinforced expectations for a final price for the current season slightly above $6.00 (the 2016/17 futures have strengthened from $6.05/kgMS to $6.11/kgMS) but since the last auction the 2017/18 futures price has weakened from $6.25/kgMS to trade at a discount to the current season at $6.00/kgMS.