Sustainability and quality of milk will be rewarded in New Zealand [News Oceania n°11/2020]

Period: June 22 – July 3, 2020

Australia+6% milk production May 2020 y-o-y

In Australia, May 2020 milk production is 6% higher than May 2019. July 2019 – May 2020 milk production decreased by 0.6% from the corresponding previous period.

Recent rainfall has left pastures in good shape, except Western Australia, for the new season began July 1. This has led to moderate hay prices in many areas. Dairy producers welcome this initiation of the new dairy season. - Milk Production Australia – Milk Production Australia

In New Zealand, May milk production in Milk Solids was positive, +3.9% compared to May 2019.

Fonterra, the largest cooperative in New Zealand, is developing a plan to pay a premium to dairy producers who deliver sustainable and high-quality Milk. This new initiative, motivated by the demand for greater sustainability by consumers, should start from June 2021. Fonterra will pay up to 10 New Zealand cents per kilogram of milk solids if the farm meets the Co-op’s on-farm sustainability and milk quality targets.

Price of Dairy Commodities

At the moment milk production is at the seasonal minimum, as well as the production of dairy products. Prices of Butter, Cheddar Cheese and Milk Powders have remained largely stable in recent weeks.

GDT of July 7+8.3% overall price change compared to last event

The Global Dairy Trade event of July 7 recorded encouraging results for the new season, with an overall price change of +8.3%, compared to the last event of June 16.
Positive changes have been observed for WMP (+14.0%), SMP (+3.5%), Cheddar (+3,3%) and Butter (+3.0%), with the only negative result for Anhydrous Butter, which records a -0,2%.

According to Mike Cronin, Managing Director of Fonterra, this result has ‘exceed expectations’, recording a good rise in the prices of dairy products, especially for WMP. Chinese buyers have returned to the GDT auction, and Cronin hopes this will be a reflection of a return to normality in their economy.

Also according to Tom Phelan, the National Dairy Committee chairperson of the Irish Farmers’ Association (IFA), this is a positive result. He says that this increase in the index is a clear indicator that the market is recovering, as global markets reopen and food service demand recovers. - GDT Results of July 7 – GDT Results of July 7

– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team

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The team is composed of young people who with the help of Computer Science study the dairy market and develop tools to provide the Operators of the dairy sector with a comprehensive real-time view of the national and international market trends.

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