Chinese Economy Weighing on Int’l Dairy Futures

Milk futures and other dairy products are lower from the Global Dairy Trade Auction on the outlook of the Chinese economic slowdown. Milk futures (Feb) are currently down .45 cents (per CWT) trading at $13.73 at the Chicago Mercantile Exchange.

Every two weeks these auctions are held in the biggest dairy product producing nation (New Zealand) serving much of Asia and Oceania. The most current auction saw prices down 1.4% than the prior event two weeks ago, and is now being perceives as possible demand outlook uncertainty.

When your biggest customer is ordering less dairy products, it is a pretty good barometer of the economic health of that nation,” said Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, sharing his fundamental assessment of the dairy futures market. Evans added,Dairy products are still in demand around the globe, but what we may be seeing here is a demonstration of fair value in (dairy price) discovery.”

The trend for milk futures is clearly down since October, but at a possible crossroads. If milk futures continues with higher highs tomorrow it can possibly change the near-term trend outlook to up.

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