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Dairy Australia - Market News


24 March 2014

Dairy Australia - Fortnightly Update 21 March 2014Dairy Australia - Fortnightly Update 21 March 2014

Dairy commodity prices eased a further 5.2%, The European Commission’s recently released report describes the late year rebound that saw 2013 milk deliveries across the EU-28 ultimately exceed 2012 levels by 0.7% and the New Zealand Ministry of Primary Industries (MPI) has announced four charges against Fonterra Limited in relation to last year’s Whey Protein Concentrate (WPC80) incident.
Dairy Australia - Market News

Global Developments

Dairy commodity prices eased a further 5.2% at event 112 on the GlobalDairyTrade (GDT) auction this week. WMP pricing averaged US$4,439/t (down 5.8%) while SMP steadied; easing 1.7% to an average of US$4,584/t. AMF pricing continues to slide; losing 10.7% (to US$4,578/t) in a return to June 2013 levels. Butter shed 4.4%, achieving an average of US$4,534/t. It wasn’t all negative moves: BMP increased 4.6% to average US$5,253/t while MPC fetched US$8,837/t (up 3.7%). MPC won’t be available for much longer on GDT however, with Fonterra announcing it will not be offered from next month. Full results at www.globaldairytrade.info.

The European Commission’s recently released Short Term Outlook for arable crops, meats and dairy describes the late year rebound that saw 2013 milk deliveries across the EU-28 ultimately exceed 2012 levels by 0.7%. Strong continuing growth is expected to see as many as nine member states exceed their 2013/14 production quotas, attracting superlevy fines for surplus production. The Commission does not anticipate a ‘spectacular surge’ in deliveries after quotas are abolished in 2015, due to significant growth in the lead-up, and an expected return to near-average farmgate prices by that time.

Following compliance enquiries, the New Zealand Ministry of Primary Industries (MPI) has announced four charges against Fonterra Limited in relation to last year’s Whey Protein Concentrate (WPC80) incident. Fonterra’s press release reads, “We have accepted all four charges, which are consistent with the findings of our Operational Review, and the Independent Board Inquiry.” Subsequent to the recall, it was confirmed that the Whey Protein Concentrate did not present a health risk.

The Australian Front

Last week Fonterra Australia announced its fifth step-up: 16 cents/kg butterfat and 40 cents/kg protein for the 2013/14 season, for suppliers in Victoria and Tasmania. This brings its current, average farmgate price to $6.64 kg/MS. Fonterra also raised its forecast, average closing price range for the 2013/14 season to $6.80-$7.00 kg/MS.

It has been another big fortnight for interest in investment in Australian dairy. While the details are yet to be, “firmed up,” Warrnambool could have another milk powder plant in the next 12 to 18 months if Midfield Meats founder Colin McKenna successfully purchases crown land for the purpose. Mr McKenna reportedly said that he wants to promote organic production growth in the region, rather than start a “milk war”.

The new owner of United Dairy Powder (UDP) was reported in The Australian this week as willing to spend up to $20 million to expand into the milk powder market, to take advantage of opportunities in China. Mr Hui said that he would only pursue the plans if increased milk supplies can be sourced, and that future expansion plans could include purchasing farming properties to secure milk supply.

Moving north, on Wednesday The Weekly Times reported that (according to Chief Executive Mike Logan) Dairy Connect has been involved in negotiations for over six months with potential (predominantly Chinese) investors in relation to three proposed milk powder plants north, west and south of Sydney.

And further north still: at last week’s Australian Dairy Farmers Summit, Federal Agriculture Minister Barnaby Joyce told the audience that he was aware of interest in substantial dairy investment in Queensland, for milk destined for Asia.



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