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Dairy Australia - Market News

12 June 2015

Dairy Australia - Market News - 12 June 2015Dairy Australia - Market News - 12 June 2015

Dairy Australia - Market News

Global Developments

Last week’s GlobalDairyTrade (GDT) auction (event 141) surprised many observers with a 4.3% decrease in the headline GDT Price Index producing the weighted average price of US$2,412/t, the lowest since August 2009. Previous events had showed signs of stability – meaning the universal falls of this auction were unexpectedly bearish, even though many products only saw limited movement. Milkfat products saw the most severe declines, with butter and AMF prices averaging US$2,619/t (down 10%) and US$3,112/t (down 7.4%) respectively. SMP was already trading close to European market support prices and only fell 1.9% on average (to US$1,982/t), with earlier contract periods falling by around twice as much as those for later delivery – suggesting oversupply remains an issue on the spot market. A stronger than expected late season in New Zealand may have overcome the depressed farmgate price outlook for 2015/16, as WMP prices eased 3.1% (averaging US$2,309/t); the biggest falls again for near term contracts. See full results at

Fonterra chief executive Theo Spierings told media this week that the major business review, started last December, is expected to lead to hundreds of head office and support function staff being laid off. Fonterra currently employ 11,500 staff in New Zealand, and 18,000 worldwide, and the business wants to redirect more employees into sales and market roles in a bid to increase returns. The number of layoffs will not be confirmed until the review is completed and approved by the board, due to occur on 1 st August.

Major Dutch dairy cooperative FrieslandCampina is also cutting jobs, announcing recently that they would cut 375 positions to boost productivity and cut costs. The jobs will be cut across two plants, both expanded and modernised in the lead-up to the removal of milk quotas. One focuses on production of infant formula, the other, condensed milk for the Middle East and African markets.

A suspected case of bovine spongiform encephalopathy (BSE) on an Irish dairy farm was announced this week. The potential case appears to be isolated, and it is unknown how the animal could have contracted the disease. If confirmed, it will be the first case since 2013, with Ireland recently awarded “negligible risk status” from the World Organisation for Animal Health.

The Australian Front

Fonterra Australia have notified Australian suppliers of a step up to an average weighted price of $6/kg MS. The step up of 12 c/kg fat and 30 c/kg protein will be paid on 15th June, backdated to July. This brings Fonterra’s price to the same level as Warrnambool Cheese and Butter and Murray Goulburn.

Murray Goulburn’s unit trust share float offer has opened, and will run from the 9 th to 24th June. Around 150 million units are being offered to global and Australian institutions, retail investors who trade through selected stockbrokers, and anyone living in 200 rural postcodes where MG operate. The target date for the unit trust to be listed on the ASX is 3 rd July, at an indicative prospectus price of between $2.10 and $3.20 per unit. MG’s 2,600 farmer-shareholders have 320 million shares.

Warrnambool Cheese and Butter (WCB) have finalised the purchase of Lion’s everyday cheese business. The deal, announced in March, includes several well-recognised brands, and the cutting, wrapping and distribution operations located in a building already owned by WCB.

Dairy Australia’s mid-year Situation and Outlook report will be available next week, Wednesday June 17th. The report provides invaluable information for farmers, dairy manufacturers and industry service providers, including a comprehensive market analysis and outlook, as well as results from this year’s National Dairy Farmer Survey (NDFS).


DOWNLOAD REPORT:- Download this report here


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