Whole milk powder futures decline amid global equity slump
September futures slipped $US50 a tonne to $US2110.
New Zealand whole milk powder futures declined, paring their earlier gains, after concerns about slower growth in China pushed down global equity markets.
September futures slipped $US50 a tonne to $US2110, and contracts from October through May also fell, according to NZX data.
Whole milk powder futures have rallied 46% from a low of $US1450 a tonne earlier this month after Fonterra Cooperative Group said it would reduce the volume it offered on the GlobalDairyTrade auction platform following a slump in prices. The price lifted 19% to an average $US1856 at the last GDT auction on August 18 and the futures are still signalling the price will rise further at the next auction on September 1. However, a slump in global equity and commodity markets has pulled back the premium.
"The market has had an incredible run since the last GDT, with the prices having rallied almost 50%, so there is a bit of correction on that, but obviously in the last few days, there has been considerable volatility in global equity markets, led by China, which is now having a bit of a contagion effect on markets generally," said OMF financial markets director Nigel Brunel. "It's a bit of a double whammy. It just ran too hard, too fast and it's just giving a bit up. Dairy is extremely volatile."
The implied premium in futures to the GDT may narrow further should stock market weakness persist, as investors pull back expectations for GDT demand, he said.
(BusinessDesk)
Tina Morrison
Tue, 25 Aug 2015
Tue, 25 Aug 2015
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Whole milk powder futures decline amid global equity slump
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