TheDairySite.com - news, features, articles and disease information for the dairy industry

Dairy Australia - Market News


16 June 2014

Dairy Australia - Fortnightly Update 13 June 2014Dairy Australia - Fortnightly Update 13 June 2014

The GlobalDairyTrade (GDT) Price Index recorded a 4.2% decline at last week’s GDT event (117) and Fonterra has reached a settlement with NZX following an NZ Markets Disciplinary Tribunal investigation.
Dairy Australia - Market News

Global Developments

The GlobalDairyTrade (GDT) Price Index recorded a 4.2% decline at last week’s GDT event (117), driven by sharp falls in average prices for the AMF and WMP. Despite gains for July delivery, the average price for WMP fell 8.5% to US$3,594/t; on the other hand, losses for AMF were concentrated towards the earlier delivery contracts, but averaged 5.0% (for US$4,058/t). These results masked positive moves for SMP (up 2.1% to US$3,863/t) and cheddar (up 8.0% to US$4,236/t). Butter remains flat at US$3,634/t, despite some moves across the forward curve.

Fonterra has reached a settlement with NZX following an NZ Markets Disciplinary Tribunal investigation into its continuous disclosure of information during the WPC80 recall in August 2013. As part of the settlement, Fonterra will pay NZ$150,000 (A$136,000) and has ‘acknowledged the Tribunal’s views’ in addition to implementing changes identified during its own inquiry into the incident and subsequent response. Fonterra’s FSF (Fonterra Shareholders Fund) is a unit trust listed on the New Zealand and Australian stock exchanges that enables investors to ‘indirectly participate in the economic performance of Fonterra.’

The Australian Front

Warrnambool Cheese & Butter (WCB) (10 June) announced another step-up for the 2013/14 season: 10 c/kg fat and 25 c/kg protein, taking the company’s 2013-14 ‘weighted average milk price’ to $6.85 kg milk solids.

Fonterra Australia has introduced some innovation into farmgate milk pricing that should help suppliers mange business risk exacerbated by volatile seasonal conditions and international commodity prices—and, for those positioned to do so, better budget for growth and profitability. Fonterra’s Fixed Base Milk Price (FBMP) enables suppliers to lock in the price received on 70% of their milk solids at a fixed milk price for the 2014/15 season while effectively transferring some of the business risk back to Fonterra. Also on offer are the Range scheme, which fixes a minimum and maximum price range; and Cap&Earn, by which farmers can elect to receive a premium for a portion of their solids.

Tasmanian company Bellamy’s initial public offering is ‘already dramatically oversubscribed,’ according to The Australian. Bellamy’s (formerly Tasmanian Pure Foods) holds an estimated 12% share of the domestic baby food and formula market and is working on new formula and packaging innovations destined for the China market. The Launceston-based company expects to raise $100 million with proceeds earmarked for growing its China and Southeast Asian business. Local investors and manufacturers have a selection of updated growth outlooks on infant formula consumption in China (at compound annual growth rates) to choose from, issued recently: 5% to 2018 (Macquarie) 5% through 2013-2020 (UBS); 8% through 2015-20 (Nomura). Macquarie’s Jamie Zhou highlighted a shift in sales channels from supermarkets to online and maternity shops. More growth opportunities for Bellamy’s and others, challenges getting into the channels notwithstanding.

Western Victorian ‘milk rush’? Camperdown Dairy International (CDI) revealed its intentions as a new dairy manufacturer. EAT Group and mining services company MCG Group are the entities behind CDI, which is looking to take equity stakes in dairy farms committed to supplying the company’s planned powder manufacturing operations at the former Bonlac site, Camperdown. CDI have reportedly purchased the site from Camperdown Dairy (the dairy business unit of Aussie Farmers Direct), which will continue operations at the same site. Another example of more opportunities and challenges for local growth, hinging on new entrants and support of sustainable farm businesses rather than milk pool reconfiguration.

Norco (2 June) proclaimed a 3c per litre increase in its base milk price. With adverse weather events and seasonal conditions affecting many Queensland and northern New South Wales farmers over recent seasons, Norco is aiming to ensure a sustainable supply base that will comfortably facilitate its 5-year contract to supply private label fresh milk for Coles as well as grow China-focused fresh milk exports. The northern-based co-op expects to have more than 200 suppliers supplying over 2oo million litres of milk annually from 1 July 2014.



DOWNLOAD REPORT:- Download this report here

Our Sponsors

Partners


Seasonal Picks

British Field Crops 2nd edition