A daily projected Commodity Milk Value

The chart on the right provides a projected Australian Commodity Milk Value (CMV) over the next 6 months at any time, recalculated daily. This uses NZX dairy futures settlement prices for SMP, butter, WMP, and AMF and a derived daily value for cheddar. It also references the Dairy Australia monthly spot price for whey powder. The daily exchange rate for the A$ v US$ is used.

The cheddar price is the most important in the Australian manufacturing mix and is determined using our fundamental analysis approach which employs econometric modelling using the historical relationship between the NZX Cheddar values with NZX quotes for butter and SMP (for underlying fat and protein values) and the US NDPSR reported prices for cheddar, which influences NZ export prices over time.

The daily settlement NZX futures prices for butter and SMP, along with the CME cash-settled cheese settlement futures prices are used to derive a daily Oceania cheddar value.

As in the case of the spot CMV, the product values are brought back to a milk value by reference to a notional product mix and estimated commodity manufacturing conversion costs.