FXstreet.com (Barcelona) - The latest Global Dairy Trade (GDT) auction saw whole milk powder prices – New Zealand’s principle export commodity – rise 5% to USD $2900/ton, which caused a reaction from the New Zealand Dollar. According to Imre Speizer, a research analyst Westpac International Bank, “The relationship between milk and the NZD has actually been very weak since mid-2011, as risk sentiment is the dominant driver of the NZD.”
However, from a longer-term perspective, milk price trends have been important, historically speaking. “Our economists forecast milk prices may fall slightly further before recovering in Q4 in line with forecast improvement in China’s economy and downside risks to future supply – Moreover, growing conditions are not expected to be less any less favorable next season if recent weather patterns continue to approach El Nino thresholds during the early spring period ahead, which would affect NZ supply.” Speizer writes.
However, from a longer-term perspective, milk price trends have been important, historically speaking. “Our economists forecast milk prices may fall slightly further before recovering in Q4 in line with forecast improvement in China’s economy and downside risks to future supply – Moreover, growing conditions are not expected to be less any less favorable next season if recent weather patterns continue to approach El Nino thresholds during the early spring period ahead, which would affect NZ supply.” Speizer writes.
