Powder Prices Ease As Butter Drops 12 per cent21 May 2013
GLOBAL - A modest 2.1 per cent decrease in the Trade-Weighted Index (TWI) emerged from GlobalDairyTrade (GDT) event 92 this week, as prices of most commodities continued their widely expected correction, write market analysts Dairy Australia.
Overall moves were relatively gentle, and some powder and AMF contracts for July and August delivery increased due to competition for limited nearterm supplies.
WMP prices eased 1.7 per cent to an average of US$4,722/t, and although October contracts averaged US$4,388/t, WMP for July delivery continues to attract a huge premium, at US$6,151/t. SMP averaged US$4,252/t (down 2.8 per cent ) while AMF dipped 0.2 per cent to US$4,598/t – with movement in spring delivery contracts again pulling the average down.
Having fallen by less than other products at event 91, butter prices dropped 12.4 per cent to average US$3,846/t at this week’s auction.
Synlait Milk Limited (Synlait Milk) has announced it is considering an initial public offering (IPO) of shares and listing on the NZX Main Board. China’s Bright Dairy & Food Co. (Bright Dairy) currently owns a 51 per cent controlling interest in Synlait Milk, with the balance of shares owned by Synlait Limited.
Bright Dairy has signalled it will retain its stake, purchased in 2009 after the abandonment of a previous capital raising effort. Shares would be made available for purchase by both the public and institutional investors in New Zealand as well as institutions in ‘Australia and certain overseas jurisdictions,’ with proceeds earmarked for debt refinancing and growth initiatives including ‘construction of a new packaging plant.’
The tighter supply situation and higher prices on global markets appear to be having an effect on volumes of butter entering the EU’s Private Storage Aid (PSA) program. Data to 5 May shows 34,531 tonnes of butter have been placed in subsidised storage, 43 per cent less than the same time in 2012.
Supply management provisions look set to remain in both versions of the new US Farm Bill, with the House Agriculture Committee voting down an alternative proposal for its draft bill that excluded the measures. The supply management provisions of the ‘Dairy Market Stabilisation Program’ (DMSP) are particularly contentious, with nearly 150 organisations and businesses registering opposition.