GLOBAL DAIRY TRADE

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.

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).

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.

GDT 182 - hold your breath!

The following blog is from JT Macfarlane who I introduced two weeks ago.  JT is keenly interested (and qualified) in commodity markets and is providing the below as a commentary on GDT; his motivation I think is mainly as a dairy farmer himself but is also as a Director of MyFarm....

Dairy commodity markets down

The following is a blog created from a regular newsletter provided by JT Macfarlane, a director of MyFarm.  JT is a dairy farm owner in his own right but he has a distinguished career as an investment banker and a particular knowledge of and interest in commodity markets.  He presented at the Grow your mind series of Seminars along with Brian Rice last year talking about how to manage with volatile commodity markets.

Down (and up) by the escalator?

The normal saying is, of course, "Down by the escalator and Up by the stairs" referring to market movements.  The escalator is the precipitous fall in prices that we saw in July and early August.  The stairs was supposed to be gradual price increases over the season.

The overnight gDT auction was very strong with the average index increasing by 16.5% and the crucial WMP market increasing by 20.6%.  This is the third in the row and we seem to be traveling back up much more quickly than most commentators considered likely.