NZ: GDT price index rose a further 4.5% overnight - ANZ

Philip Borkin, Senior Economist at ANZ, notes that the GDT Price Index rose a further 4.5% overnight in NZ, hot on the heels of the 11% surge in the prior auction.

Key Quotes

“Since August, prices have lifted by over 40%. Overnight gains were led by the likes of butter milk (+13%) and skim milk (+10%) powders, with the latter the product most heavily reduced when Fonterra announced the latest round of GDT supply cuts. Tight supply remains a key factor behind prices gains. For whole milk powder (where earlier volume reductions were dominated), prices rose a further 3.2%, although product for immediate delivery saw lower prices, perhaps a sign that after scrambling to buy product at the prior auction, buyers’ near-term requirements are now satiated.”

“Nevertheless, this auction adds further upside to 2016/17 farmgate milk price forecasts and while there would normally be an update from Fonterra in early December (under DIRA regulations), we wouldn’t rule out something earlier.”