NZ: Dairy prices holding its nerve – ANZ

Analysts at ANZ note that New Zealand’s whole milk powder prices held the key level of US$2,800/t overnight, providing some cheer for farmers.

Key Quotes

“This key technical level and dry concerns in parts of New Zealand seem to have won the day. Dry concerns also seem to have been reflected in SMP increasing (+4.7%) despite bearish supply signals from elsewhere.”

“On the other hand, Butter prices came back down to earth with a thud as seasonal demand drops and supply concerns moderate, with European milk supply increasing. Fonterra is due to provide a milk price update tomorrow morning where this result will provide some wiggle room. Our forecast remains $6.25 to $6.50/kg MS and we expect tomorrow’s update will be toward the bottom of this band.”