Westpac On The Latest Dairy Auction

The local bank provides an update post the weak dairy auction from overnight. It maintains its current milk price forecast post the result.

Westpac: "This week’s auction was very weak across the board. Overall prices fell significantly and reversed the gains seen since March this year. Overall prices fell 6.9% while the “fats” fell between 6.9 and 10.7% respectively. Overall prices still sit above long-term averages (3.6% over the 10-year average) although the key Whole Milk Powder price is now just below the 10-year average and almost 6% below its 5-year average.

Futures markets had suggested a significant move down in prices were in the offing following the fall in prices at the GDT “Pulse” auction. There is a growing view that the significant run up in “fats” prices – especially Anhydrous Milk Fat – may have run their course and that the current higher price levels are encountering buyer resistance.

The fall in prices balances up our previous upside risks on our 2025 Milk price forecast of $8.40. Futures market prices still look consistent with that kind of outcome."