Global Benchmarks

The Commodity Milk Value (CMV) approach to valuing the milk equivalent value of commodity prices can be used to compare market conditions across major exporting regions. Variations in prices paid across regions arise from differences in product mix, conversion costs, competition for milk supply and currencies.

In the case of the United States, it uses a regulated, domestically-focused milk pricing system that often results in farmgate price trends that are somewhat divorced from the rest of the global dairy market

This compares recent historical commodity milk values in major exporting dairy producers based on spot commodity prices for butter, SMP, WMP and cheese drawn from each wholesale market.

The calculation is based on an appropriate product mix in each case.

Source: Freshagenda analysis using reported prices from NZX, European Commission, CME

This compares projected commodity milk values in the major exporting dairy producers as shown in the chart based on latest weekly futures prices for butter, SMP, WMP and cheese (as appropriate in each case). These are drawn from the CME (for US), NZX (New Zealand) and the EEX (EU).

The calculation is made on the same basis described above.

Source: Freshagenda analysis using NZX, CME and EEX quotes

This compares commodity milk values in Australia and NZ based on weekly spot commodity prices for butter, SMP, WMP and cheese (converted to A$).

The weekly prices are each drawn from the NZX weekly spot market quotes issued each Friday. The differences are explained below.

Source: Freshagenda

This explains the major reasons for the differences between weekly CMVs for Australia and NZ (each expressed in A$) – as per the chart above:

“Protein adj” refers to the different definitions of protein used in measuring the volumes of farm milk collections;

“Conversion costs” reflect the lower unit costs of the larger scale of NZ manufacturing plants;

“Mix difference” highlights the differences in commodity product mix between the two industries, with NZ largely focused on whole milk powder, while Australia’s mix usually provides a benefit in CMV terms due to the higher returns from  cheese.

Source: Freshagenda