GDT on the cards this week for NZD/USD traders - ANZ

Analysts at ANZ noted that this week’s GDT auction is expected to see a lift for whole-milk powder prices (+3% NZX WMP) and a flat outcome for other products.

Key Quotes:

"There is increasing concern around early- season milk supply from New Zealand, which has driven expectations of an upcoming production downgrade from Fonterra and lower GDT volumes. 

Very low carryover inventory from 2016/17 (Fonterra carrying 54,000 mt less product into 2017/18), which was arguably the reason for the dramatic fall in August exports, as well as strong demand growth for other foodservice/ingredient products (i.e. cheese and creams) also seem to be supporting prices. 

Both dynamics are reducing the availability of wholemilk powder through sales channels outside GDT (as GDT volumes have been largely unchanged so far).

 The other support factor is Chinese demand for the free trade window (circa 10% lower tariff). However, this demand appears to be steady rather than spectacular, with the last auction receiving more demand support from South- East Asia and the Middle East."