Livesquawk have gathered together some of the bank analyst responses to Fonterra's GlobalDairyTrade auction overnight

Any bolding is mine, for emphasis


  • With NZ production falling hard, dairy markets are turning to other producers to fill the gap. As EU, US and Australian production holds up relatively better, markets anticipate other producers can offset NZ declines.
  • We think this market assumption is misplaced - lost NZ exports are too big to cover.
  • NZ production has not fallen this hard since 1999.
  • Moreover, NZ is the largest dairy exporter, and in particular exports the lion's share of WMP. The EU and others cannot fill the NZ hole. As a result, we expect dairy prices to regain recent losses and for prices to move higher over the course of the 2015/16 season. Consequently, we stick with our milk price forecast of $5.00/kg


  • World dairy prices fell for a second consecutive GlobalDairyTrade auction, with the overall index down by 7.4%. The average winning price was $2,569/tonne.
  • The decline in recent auctions means that our forecast milk price of $5.30/kg for this season is now looking on the high side. However, we'd be reluctant to revise down our forecast just as we head into a summer that will feature a potentially severe drought-causing El Niño weather pattern.
  • Disruptions to New Zealand's milk supply can have a significant impact on world prices, though perhaps less so now than in the past, as the Northern Hemisphere has ramped up its productive capacity in recent years.


I posted a quickie take from ANZ here ... they're taking an opposite view to ASB and Westpac