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SNAPSHOT ph +64 6 323 6393 email [email protected] web agrihq.co.nz. OctOber 27, 2017. AGRIHQ WMP. PRICE. (US$/TONNE). N
October 27, 2017

GLOBAL DAIRY SNAPSHOT  AGRIHQ WMP PRICE (US$/TONNE)

NZX WMP FUTURES NOVEMBER 2017 (US$/TONNE)

NZD:USD

EUR:USD

BALTIC DRY INDEX

3050

2940

0.684

1.165

1555

Oceania production falters

Amy Castleton

Milk production data out yesterday shows that Oceania production is faltering this season. Total NZ milk production was down 1.3% year on year in September, on a milksolids basis. This puts season to date production down 0.1%, as the falls experienced in August and September have outweighed the excellent results for winter milk production. Production in June and July was boosted by extra winter milk contracts being on offer, but since then extremely wet conditions have affected milk production. This is the third season in a row in which September production has fallen behind the previous year. Milk production is also expected to fall behind last year in October. NZ has only started to dry out over the past few weeks. Most areas now have more normal soil moisture levels, though there are still pockets where soil moisture is at field capacity, notably in Waikato – our largest milk producing region. Summer production should benefit from the high soil moisture levels and is expected to be up on last season. But the exceptional results of last autumn are unlikely to be matched in 2018, so NZ production will likely track behind last year at the tail end of the season. As a result, AgriHQ now expects

no growth in milk production for the 201718 season. Our previous forecast was for 1.5% growth. Australian production also fell in September, albeit by a relatively small amount of 0.6%. August figures were also revised and are a little better than previously reported at 0.9% up year on year. This puts Australia’s production at up 1% season to date. Victoria fell behind in September, as much of the state was quite dry. Australia’s milk production is expected to grow 2 – 3% this season. The NZ milk production figures should be supporting whole milk powder (WMP) prices, but this is yet to play out in the market, and in fact WMP looks to be coming down further. Prices for WMP futures trading on the NZX Dairy Derivatives market dropped below US$3000/t this week. The November contract settled at US$2940/t yesterday. All contracts for the rest of the season are currently priced between US$2900/t and US$3000/t. Some contracts have traded up between US$10/t and US$20/t this morning, but do still remain below US$3000/t. WMP prices have also eased in Europe over the past few weeks. European prices are higher than NZ’s, averaging US$3257/t this week, though this is down about

AgriHQ Dairy Commodity Prices – US$/tonne fob This week Last week

WMP futures China’s imports below jump, for US$3000/t another month

high lights

US$250/t since the beginning of the month. There has been little urgency from buyers to secure WMP. We are at the peak of NZ’s season so there isn’t really a shortage of product right now, but product will start to become tighter going forward. China has been the only country that has been regularly buying WMP, but China will be buying now to land product while the lower tariff rate applies from 1 January. China’s WMP imports rocketed up even further in September, having imported 242% more product than in September 2016. The majority of the increase was NZ product, but China also imported more WMP from Australia, the US and Europe. European butter prices are coming down as fast as they went up. European butter is averaging US$6610/t this week, down about US$600/t from a week ago. The EEX market expects butter prices to come back further, reaching US$51715/t by January. Prices for butter futures on the NZX Derivatives market show a similar trend. The November butter futures contract is priced at US$5680/t, while the January contract is at US$5200/t.

Currency movements Four weeks ago

Last year

1.4

27-Oct-17

20-Oct-17

Change

29-Sep-17

Change

28-Oct-16

Change

Butter

5800

5800

↔ 0%

6000

↓ -3%

3980

↑ 46%

1.2

Skim Milk Powder

1800

1800

↔ 0%

1975

↓ -9%

2300

↓ -22%

1

Whole Milk Powder

3050

3050

↔ 0%

3100

↓ -2%

2800

↑ 9%

Cheddar Cheese

4000

4050

↓ -1%

4000

↔ 0%

3450

↑ 16%

0.8

Casein - Acid

7000

7000

↔ 0%

7200

↓ -3%

7200

↓ -3%

Anhydrous Milkfat

6800

6800

↔ 0%

6800

↔ 0%

5100

↑ 33%

0.6 Dec 16

Weighted Average

3220

3220

↔ 0%

3310

↓ -3%

2930

↑ 10%



ph +64 6 323 6393

Mar 17

NZD:USD EUR:USD

email [email protected]

Jun 17

Sep 17 AUD:USD

web agrihq.co.nz

GLOBAL DAIRY SNAPSHOT

October 27, 2017

PAGE 2

Dairy derivatives markets NZX WMP Futures

26-Oct-17

19-Oct-17

Nov-17

2940

3060

Dec-17

2935

EEX Change

Open Interest



-3.9%

6921

3030



-3.1%

7144

Jan-18

2920

3025



-3.5%

5583

Feb-18

2920

3040



-3.9%

4265

Mar-18

2925

3040



-3.8%

2865

Apr-18

2925

3025



-3.3%

1390

CME

26-Oct-17

Change

26-Oct-17

Change

SMP/NFDM Futures Nov-17

1750

1810



-3.3%

1820

1738

-8.2%

1653

-4.2%

Dec-17

1730

1790



-3.4%

1281

1741

-7.5%

1653

-3.9%

Jan-18

1760

1770



-0.6%

1090

1772

-8.1%

1675

-3.1%

Feb-18

1750

1760



-0.6%

681

1776

-9.1%

1694

-3.7%

Mar-18

1750

1760



-0.6%

619

1778

-9.9%

1741

-3.1%

Apr-18

1775

1775



0.0%

95

1797

-7.0%

1769

-3.0%

Nov-17

6500

6575



-1.1%

133

Dec-17

6350

6480



-2.0%

173

AMF Futures

Jan-18

6100

6275



-2.8%

264

Feb-18

6000

6200



-3.2%

210

Mar-18

5980

6125



-2.4%

222

Apr-18

5900

6160



-4.2%

127

Nov-17

5680

5680



0.0%

395

5915

-15.9%

5090

-5.2%

Dec-17

5250

5250



0.0%

552

5649

-15.6%

5154

-3.8%

Butter futures

Jan-18

5200

5200



0.0%

465

5175

-16.8%

5159

-3.3%

Feb-18

5150

5150



0.0%

300

5205

-12.0%

5159

-3.5%

Mar-18

5150

5150



0.0%

166

5205

-12.0%

5191

-2.7%

Apr-18

5150

5150



0.0%

68

4850

-15.0%

5181

-3.1%

Sep-18

6.40

6.59



-2.9%

3994

Sep-19

6.25

6.25



0.0%

10

Sep-20

6.35

6.35



0.0%

0

Milk price futures

Global Dairy Trade GlobalDairyTrade - US$ per tonne

Fonterra offer volumes - tonnes At auction on Tuesday October 17, 2017

Results from auction - Tuesday October 17, 2017 Contract period

1

2

3

4

5

Contract period

1

2

3

4

5

6

Shipping month

Nov

Dec

Jan

Feb

Mar

Shipping period

Nov

Dec

Jan

Feb

Mar

Apr

AMF

7540

7053

6710

6648

6555

AMF

115

900

710

550

275

0

0

0

0

0

0

0

0

0

0

0

0

BUTTER

BMP

6140

6075

5384

5385

5335

BUTTER

BMP

165

945

730

565

190

0

CHEDDAR

4200

4110

4079

4100

4175

CHEDDAR

80

450

450

400

100

0

LACTOSE

0

0

0

0

0

REN CAS

50

250

150

100

50

0

REN CAS

5739

5544

5507

5700

6029

SMP-NZ

250

3500

2600

1375

760

0

SMP

1860

1849

1752

1749

1758

SMP-AU

0

0

0

0

0

0

WMP

3083

3071

2936

2923

2935

2500

9730

4700

3250

1300

0

GDT Price Index

1039

WMP TOTAL



ph +64 6 323 6393

email [email protected]

web agrihq.co.nz

GLOBAL DAIRY SNAPSHOT

WMP

4000

October 27, 2017

AMF

7200

3500

PAGE 3

6200

3000

5200

2500 4200

2000 1500 Sep-16

Jan-17

May-17

Sep-17

Jan-18

SMP

3000

3200 Sep-16

6300

2000

4300

Jan-17

May-17

Sep-17

Jan-18

Cheddar

4600

2300 Sep-16

Jan-17

Butter

8200

Sep-17

Jan-18

May-17

Sep-17

Jan-18

Whey

1250

4200

May-17

Butter

8300

2500

1500 Sep-16

Jan-17

1000

3800 6200 750

4200

3400

2200 3000 Aug-16 Sep-16

Dec-16 Jan-17

GDT

May-17

NZX Futures

Apr-17 Sep-17

Jan-18

EU Quotations

500 Dec-16

Aug-17

Mar-17

EEX

Jun-17

Dec-17

Sep-17

CME (historic)

Dec-17

Mar-18

CME

Disclaimer: This report is published by NZX Rural Limited (“NZX Agri”) for your information only. This report does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or financial product. No part of this publication may be redistributed or reproduced in any form or by any means or used to make any derivative work without written permission from NZX Agri. NZX Agri (including its group companies and each of their directors, officers, employees and contractors) shall not be liable (except the extent strictly required by law) for the use of the information contained in this report, however arising. This report is published with due care and attention, but NZX Agri and its group companies accept no liability in relation to the completeness, accuracy or timeliness of this report and its contents.



ph +64 6 323 6393

email [email protected]

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