Global Dairy Trade (GDT) prices rebounded at the April 2 auction with the glimmer of promising signs for 2024-25.
The GDT price index was up 2.8 per cent, reversing some of the decline in March.
Gains were broad based with the cheddar up 4.1pc, whole milk powder up 3.4pc and butter up 3.1pc,
Only butter milk powder (down 0,5pc) and lactose (down 3.1pc) recorded losses.
The return of Chinese buyers to the market - although at modest levels - has provided some confidence about prices next season.
ASB economist Nat Keall said later-dated WMP contracts were still commanding a premium over shorter-term contracts.
"That shows this auction's rebound hasn't been driven by a short-term supply squeeze and might point to a little bit of momentum as the season gets underway," he said.
"China was a little bit more active in the WMP market than it was last auction (taking nearly half the product on offer), but that still isn't a particularly big chunk by historical standards, and we need to see if it is sustained at coming auctions.
"Our bias is for prices to remain in their current holding pattern for another few months at least, before gradually moving higher over the latter part of the calendar year (and the middle part of next season) as the global economy rebounds.
"Relatively constrained northern hemisphere dairy output should also be a support."
Westpac's chief economist Kelly Eckhold said Middle Eastern buyers also returned to the market at this auction.
"Interestingly, European buyers picked up the greatest proportion of product since 2021, continuing a trend of greater support at the auctions - perhaps reflecting declining production at home," he said.
"Overall prices remain around long-term averages, but, of course, on-farm costs have increased significantly over this time."
But NZX data and insights commercial manager Cristina Alvarado has warned the global dairy industry is going through a complex period.
Globally, milk production trends varied across regions, Ms Alvarado said.
"Looking ahead, uncertainties surrounding ongoing supply disruptions and shifting demand dynamics persist, presenting both challenges and opportunities for stakeholders in the dairy industry," she said.
"Weather patterns, geopolitical tensions, and economic factors will continue to shape the industry's trajectory in the months to come."
Carlene Dowie
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
