GLOBAL DAIRYSNAPSHOT

THURSDAYAPRIL 13, 2017

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AGRIHQ WMP PRICE (US$/TONNE)

2920

NZX WMP FUTURES APRIL 2017 (US$/TONNE)

3000

NZD:USD

0.6953

EUR:USD

1.0664

BALTIC DRY INDEX

1262

Trading on the NZX Dairy Derivatives market reached record levels this week, driven by price uncertainty as a result of recent adverse weather in New Zealand. Two cyclones have hit NZ in the past fortnight. Cyclone Debbie caused widespread flooding across the North Island with Northland, Bay of Plenty and parts of Waikato the worst affected regions. The same areas are now feeling the brunt of Cyclone Cook which is progressing down the island delivering heavy rain and gale force winds.

The cyclones mean milk production will drop away quicker than would otherwise have been the case, but given autumn milk flows were abnormally high then this is likely to result in more normal milk intakes for the remainder of the season which draws to a close at the end of May.

The uncertainty surrounding exactly what will happen with milk intakes fuelled record volumes of futures traded on the NZX Dairy Derivatives market on Tuesday. The daily volume for dairy commodity futures was 4060 lots (or tonnes) with a further 400 lots of whole

milk powder (WMP) options contracts traded. The majority of the trading activity was in WMP futures where prices made some gains.

The nearby WMP futures contract lifted US$70 over the past week to open today at US$3000/t. The May contract lifted even further gaining more than US$200/t in the past week. All WMP futures contracts dated out to the end of the calendar year are trading above US$3000/t.

Milk price futures also benefitted from the rally in WMP futures. The majority of the action in the milk price contracts has been in the Sep 18 contract which relates to next season’s milk price. This contract traded at $6.10/kg milksolids (MS) today having gained 20 cents in the past week. The current season contract (Sep 17) has come up 2c in the past week to $6.03/kg MS.

Intervention providing short-term support

Skim milk powder (SMP) prices have lifted slightly in Europe this week.

SMP is now flowing into intervention which is providing short-term s u p p o r t t o t h e m a r k e t a s i t r e d u c e s t h e v o l u m e of product available for sale elsewhere.

Germany and Lithuania pushed SMP to invention last week with 250t from Germany and 479t from Lithuania going into the European Commission support programme.

This means now 1201t of the 109,000t quota for the season has now been filled.

The 109,000t limit is expected to be reached within about six weeks as milk intakes across Europe continue to lift.

Europe is not the only region struggling to deal with excess milk volumes. The strong run of prices in the United States has encouraged more milk to be produced which is pushing the limits of processing capacity in some regions.

The extra milk will most likely end up in the cheese plants, but as their capacity is tested, more SMP or nonfat dry milk will also be produced. This will put downward pressure on the price of these two commodities.

Susan Kilsby

AgriHQ Dairy Commodity Prices – US$/tonne fobThis

weekLast week Four weeks ago Last year

07-Apr-17 31-Mar-17 Change 10-Mar-17 Change 08-Apr-16 Change

Butter 4860 4860 0% 4700 3% 2750 77%

Skim Milk Powder 1950 1900 3% 2250 -13% 1750 11%

Whole Milk Powder 2920 2900 1% 2825 3% 2000 46%

Cheddar Cheese 3400 3400 0% 3600 -6% 2650 28%

Casein – Acid 7400 7400 0% 7400 0% 6000 23%

Anhydrous Milkfat 5900 5900 0% 5650 4% 3350 76%

Weighted Average 3030 3010 1% 3010 1% 2080 46%

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Inclement weather triggers record trading volumes

highlights

Milk price futures lift for next season

NZ hit by another cyclone

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Currency movements

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Apr  1

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NZD:USD AUD:USDEUR:USD

PAGE 2GLOBAL DAIRY SNAPSHOT THURSDAY APRIL 13, 2017

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GlobalDairyTrade US$ per tonne

Results from auction – Tuesday, April 4, 2017

Contract period shipping month

1 2 3 4 5 6

Apr May Jun Jul Aug Sep

AMF 6565 5930 5887 6065 5520 n/a

BMP 1580 1575 1620 n/a n/a n/a

BUTTER 5345 4855 4715 4720 4380 n/a

CHEDDAR 3269 3258 3318 n/a 3335 n/a

LACTOSE n/a 927 n/a n/a n/a n/a

REN CAS 6464 6229 6222 6387 n/a n/a

SMP 1921 1911 1908 1946 1905 n/a

WMP 2943 2945 2903 2917 2853 n/a

GDT Price Index 987

Fonterra volumesAnnual forecast

On offer as at Tuesday April 4, 2017

Contract period shipping month

May Jun Jul Aug Sep Oct

AMF 68350 175 920 430 285 315 0

BMP 7495 100 300 170 0 0 0

BUTTER 42160 125 630 400 210 325 0

CHEDDAR 24503 100 210 200 0 60 0

REN CAS 11350 50 250 125 50 0 0

SMP-NZ 132170 475 2725 1655 325 450 0

SMP-AU 7200 100 250 150 100 0 0

WMP 342640 2100 5000 2600 1000 1000 0

TOTAL 635868

Dairy derivatives markets

Global Dairy Trade

NZX EEX CMEWMP Futures

12-Apr-17 05-Apr-17 ChangeOpen

Interest12-Apr-17 Change 12-Apr-17 Change

Apr 2017 3000 2930 2.4% 8242

May 2017 3140 2925 7.4% 9454

Jun 2017 3140 2950 6.4% 4209

Jul 2017 3140 2930 7.2% 2401

Aug 2017 3140 2930 7.2% 2460

Sep 2017 3150 2930 7.5% 1972

SMP/NFDM Futures

Apr 2017 1925 1920 0.3% 1552 1893 2% 1863 1%

May 2017 2000 1925 3.9% 1086 1920 2% 1899 1%

Jun 2017 2075 1950 6.4% 905 1933 0% 1962 3%

Jul 2017 2150 2020 6.4% 710 1954 0% 2005 1%

Aug 2017 2150 2040 5.4% 234 1976 0% 2050 0%

Sep 2017 2150 2070 3.9% 126 1987 0% 2086 -1%

AMF Futures

Apr 2017 5940 5800 2.4% 101

May 2017 5650 5650 0.0% 137

Jun 2017 5550 5550 0.0% 2224

Jul 2017 5450 5550 -1.8% 275

Aug 2017 5400 5450 -0.9% 190

Sep 2017 5300 5300 0.0% 189

Butter Futures

Apr 2017 4750 4750 0.0% 187 4536 -1% 4641 -1%

May 2017 4500 4500 0.0% 131 4506 2% 4657 -2%

Jun 2017 4550 4450 2.2% 141 4490 2% 4707 -1%

Jul 2017 4450 4400 1.1% 185 4463 1% 4756 -1%

Aug 2017 4420 4350 1.6% 140 4455 0% 4767 -1%

Sep 2017 4350 4300 1.2% 132 4426 1% 4784 -1%

Milk Price Futures

Sep 2017 6.03 6.01 0.3%

Sep 2018 6.05 5.90 2.5%

Sep 2019 6.00 6.00 0.0%

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PAGE 3GLOBAL DAIRY SNAPSHOT THURSDAY APRIL 13, 2017

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Disclaimer: This report is published by NZX Rural Limited (“NZX Agri”) for your information only. This report does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or financial product. No part of this publication may be redistributed or reproduced in any form or by any means or used to make any derivative work without written permission from NZX Agri. NZX Agri (including its group companies and each of their directors, officers, employees and contractors) shall not be liable (except the extent strictly required by law) for the use of the information contained in this report, however arising. This report is published with due care and attention, but NZX Agri and its group companies accept no liability in relation to the completeness, accuracy or timeliness of this report and its contents.

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Jan-­16 May-­16 Sep-­16 Jan-­17 May-­17 Sep-­17

WMP

GDT NZX  Futures

3000

3600

4200

4800

5400

6000

Jan-­16 May-­16 Sep-­16 Jan-­17 May-­17 Sep-­17

AMF

GDT NZX  Futures

1500

2000

2500

3000

Jan-­16 May-­16 Sep-­16 Jan-­17 May-­17 Sep-­17

SMP

GDT NZX  Futures EU  Quotations

EEX CME  (historic) CME

2000

4000

6000

Jan-­16 May-­16 Sep-­16 Jan-­17 May-­17 Sep-­17

Butter

GDT NZX  Futures

EU  Quotations EEX

CME  (historic) CME

3000

3400

3800

4200

Jan-­16 May-­16 Sep-­16 Jan-­17 May-­17 Sep-­17

Cheddar

CME  (historic) CME

500

750

1000

1250

Aug-­16 Nov-­16 Feb-­17 May-­17

Whey

CME  (historic) CME EU  Quotations EEX