6 Apr 2016

European moves lead to slight lift in dairy futures market

3:36 pm on 6 April 2016

Dairy product prices have lifted slightly on the NZX Futures Market because the European Intervention Programme is buying up skimmed milk powder, says an AgriHQ analyst.

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The original limit for the European programme was 109,000 tonnes of skim milk powder, but they have just extended it to 218,000 tonnes, says Susan Kilsby.

Ms Kilsby says on the NZX Futures Market whole milk powder for April is trading at just over $US1900 a tonne, but in December it could rise to just over $US2300 a tonne.

She said the movement of dairy product in Europe was having a brief flow-on effect on New Zealand.

"So in the short term, having the product going into intervention is slightly supportive to prices, that product is not going to be sold on world markets and it's not going to be competing with NZ product. But so long as there is product, stock prices can't rise either.

"It's going to take months and months for product to move through intervention, back out into the market and be used up, so during this time we don't really expect prices to move up significantly."

Ms Kilsby said the movement of product showed that the European dairy industry was not waiting for prices to lift and was playing it safe by selling it to the government.