WMP and Butter prices reach the highest level of 2018 [News Oceania n°8/2018]

Period: April 2 – 13, 2018

In Australia, producers and manufacturers have some uncertainty as to what milk production outcome is expected for the coming season.

Murray Goulburn, the biggest dairy company in Australia, was sold to Canadian dairy giant Saputo.

Cyclones battered parts of New Zealand, downing some trees, causing significant power outages and closing some roads. The impact on milk production and shipment has yet to be determined with any precision.

Dairy producers have already begun to assess budgets for the next New Zealand milk season. Some observers believe that WMP prices might realistically remain in a range between 2,900$ and 3,300$/MT next season and fell milk prices could be decent for producers.

WMP prices in Oceania are higher reaching the highest level of 2018. Current pricing is very comfortable for manufacturers in terms of profitability. Manufacturers are benefitting from recent market apprehension about less New Zealand milk availability, which has helped to move prices up.

Butter prices have also increased, however they are lower than in Western Europe. Butter demand in Australia for domestic consumption has been challenging for manufacturers to satisfy, so the price is expected to remain strong in coming weeks, especially with milk production in a declining part of the season.

Cheddar prices in Oceania are stronger. Manufacturers would like to make more cheese, but, particularly in New Zealand, are limited by milk supplies and the pull of milk toward WMP.

SMP prices are slightly weaker, but still above prices in Western Europe. Production is not taxing capacity, which is acceptable with manufacturers, as profitability is higher in other products.

Exports of Butter, Cheddar and SMP decreased in the first 2 months of 2018, for both New Zealand and Australia. However, there is a strong export interest for WMP in both countries and for Cream in New Zealand.