GDT auction: a step lower - Westpac
|Analysts at Westpac Banking Corporation explained that dairy prices fell sharply in last night’s GDT auction.
Key Quotes:
"While we had been expecting prices to soften in the coming months, the size of last night’s fall in prices was a surprise, effectively taking prices to the lower bounds of where we were expecting to see prices trade over the season."
"While it’s difficult to pin the reason for the fall in diary prices on any one factor, increased nervousness about the impact of trade wars on global growth prospects may have played a role."
"Dairy prices took a dive in last night’s GlobalDairyTrade auction. The overall price index was down 5%, the biggest fall since March last year. Beneath the headline, weakness in prices was widespread across the products on offer. Whole milk powder prices fell 7.3%, a much bigger fall than the 1% or so decline futures markets had been expecting. Skim milk powder prices were also weaker, falling 4.6% while butter prices were down 4%. The GlobalDairyTrade price index has now fallen 7.4% over the last three auctions."
"Surprisingly there was no reaction to the fall in dairy prices in currency markets. The NZ dollar actually rose a little overnight. If we were to see further falls in dairy prices we would expect currency markets to sit up and take notice."
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