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Dairy product prices extend rebound on upbeat outlook

Wednesday 7th September 2016

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Dairy product prices climbed at the Global Dairy Trade auction, adding to fresh signs of expectations that the worldwide glut is easing.

The GDT price index rose 7.7 percent to US$2,920, up from US$2,731 at the previous auction three weeks ago. Some 36,748 tonnes of product was sold, down from 37,766 tonnes at the previous auction.

“This was a smaller overall lift than we saw at the last event, but is still an excellent result,” AgriHQ dairy analyst Amy Van Ossenbruggen said in a note. “While it may still be a little early to say dairy commodity prices are recovering, fundamentals are pointing towards a continued improvement in the sector.”

Two weeks ago Auckland-based Fonterra Cooperative Group, the world’s No.1 dairy exporter, raised its forecast milk payout for the current season because of gains at the GDT auction on August 16.

At the latest GDT auction, whole milk powder increased 3.7 percent to US$2,793 a tonne.

“WMP volume was mostly sold through the middle of the curve—shipping November through January,” according to Van Ossenbruggen. “Much of the demand at this event came from China, followed by bidders from South East Asia and Oceania.”

Anhydrous milk fat rallied 15.4 percent to US$4,769 a tonne, while butter jumped 14.9 percent to US$3,764 a tonne.

“Milk fats were the stars of this auction,” Van Ossenbruggen noted. 

Skim milk powder climbed 10 percent to US$2,224 a tonne, while cheddar rose 9 percent to US$3,436 a tonne.

Butter milk powder advanced 6.8 percent to US$2,070 a tonne, while rennet casein added 6.7 percent to US$6,720 a tonne, and lactose rose 2 percent to US$787 a tonne.

The New Zealand dollar last traded at 74.13 US cents at about 1.09pm in New York, compared with 73.05 US cents at 5pm in Wellington the previous day.

There were 131 winning bidders out of 199 participating at the 14-round auction. The number of qualified bidders rose to 613, up from 606 at the previous auction.

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