1 Sep 2015

Dairy price lift expected overnight

4:47 pm on 1 September 2015

A currency strategist is expecting a lift in dairy prices in the overnight global dairy trade.

Milk at Pak n Save Kilbirnie.

Photo: RNZ / Alexander Robertson

Westpac's Imre Speizer said dairy futures markets appeared to be closely reflecting what happens at Global Dairy Trade (GDT) auctions - and, based on that, prices should rise.

The dairy futures market allows traders to take a bet on what will happen to the price of whole milk powder at future auctions.

International dairy prices have fallen to their lowest levels on record in recent months, however they rose for the first time a fortnight ago.

Mr Speizer said Westpac had studied how well the futures contract predicted upcoming auction prices and found, in the past year, it has been quite accurate - not only in predicting the direction of the auction result, but also the magnitude of the rise or fall.

"Currently, they are predicting another bounce - somewhere between 10 and 13 percent order of magnitude and we have no reason to expect otherwise," he said.

"We will wait and see if the futures do a good job of prediction."

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