Archive: Latest GDT decline affects NZ milk price forecast

Published 19 November 14

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Following another decrease in average prices at this week’s GDT auction, a New Zealand bank (ASB) has cut its 2014-15 Fonterra milk price forecast by 8% to $4.70/kg of milk solids (kg/MS). Tuesday’s GDT results saw prices drop for both WMP and SMP by 5.1% and 5.7% respectively (see all auction results here).

In the last two GDT auctions average prices appeared to be flattening out but the latest decline, whilst not as dramatic as previous drops, suggests recovery is still not underway. Fonterra’s milk price in part reflects GDT values for WMP and SMP. The continuing declines have led to suggestions from NZ economists that Fonterra may cut its 2014-15 forecast milk price when it reviews its forecasted pay-out price in mid-December, which currently stands at $5.30/kg MS.