Prices at latest Global Dairy Trade disappoint

WMP prices managed a meagre 0.3% lift, but that was below prior futures market expectations of a 1.9% lift, according to a note by New Zealand bank ASB.

Nat Keall Economist with the bank said regardless of direction, all ingredients sold on the auction platform underperformed prior market expectations.

"Broader demand and supply dynamics in global dairy markets appear relatively little changed to us.

"Global dairy supply looks set to be better next season than it has been over the last twelve months. European milk production continues to make year on-year gains as we enter the Southern Hemisphere low-point," he said.

While he said milk production in New Zealand would lift off its lows over its season as some input costs ease, ASB don't expect NZ milk production to return to the peaks it reached in 2020/21.

On the demand side, he said the bank had tweaked its estimates (a bit higher in 2023 and a bit lower in 2024) but still anticipated a relatively subdued outlook.

"We remain cautious about the outlook for Chinese demand. With local WMP production strong and inventories coming off recent highs, China has only partially returned to the auction party, taking only about half the WMP on offer.

"April economic data released yesterday also showed the Chinese economic recovery remains mixed, with retail sales underperforming market expectations," he said.