JT Macfarlane's blog

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.

2016/17 nearly over

The 2016/17 season is coming to a close and although there have been a  few surprises (March production data), the emphasis is now really on 2017/18.  It is worth noting that the year has been better than expected from a revenue and profitability perspective, notwithstanding the climatic challenges that farmers have been through. At the start of the season a $6+ milk price and a 40 cent dividend was something we would have all accepted without too much thought!

WMP under performing; GDT 186

Commodity prices:

Some could be bored with some of my commodity commentary and the repeated references to supply-demand balance. The chart below, I think, is an interesting example of these factors.

Auction 185 - steady?

The last auction preview (auction 184) was titled “attempting to find a base”.  Notwithstanding that somewhat optimistic title, futures and price action ahead of the auction was suggesting further significant falls in both WMP (circa 4-6%) and SMP (circa 10%+).

Auction 184 - finding a base?

SUMMARY:

Another testing auction (183) ...

Dairy commodity markets

The last 6 weeks has proved more challenging than expected for both dairy commodity market and market forecasters.