Dairy product prices decline for second auction in 2016

Wednesday 20th January 2016

Dairy product prices fell in the latest GlobalDairyTrade auction, declining for the second time this year, amid expectations that worldwide supply will outstrip demand.

The GDT average winning price fell 1.4 percent to US$2,405, down from US$2,458 at the previous auction two weeks ago. Some 21,930 tonnes of product was sold, down from 25,671 tonnes at the previous auction two weeks ago.

The AgriHQ 2015-16 Farmgate Milk Price fell 17 cents to $4.43 per kilogram milksolids after the GDT auction. This compares to Fonterra’s current 2015-16 milk price forecast of $4.60/kgMS.

“The weak GDT results, while disappointing, were aligned with market expectations,” AgriHQ dairy analyst Susan Kilsby said in a note. “Global demand for dairy commodities continues to be weak relative to global milk supply.”

Rennet casein fell 7.8 percent to US$4,405 a tonne, while butter dropped 5.9 percent to US$3,162 a tonne. Cheddar shed 3.4 percent to US$2,867 a tonne, and skim milk powder retreated 3.2 percent to US$1,835 a tonne.

Lactose declined 1.7 percent to US$579 a tonne, while whole milk powder slipped 0.5 percent to US$2,188 a tonne.

The NZX Dairy Futures market had anticipated a reduction in both whole milk powder and skim milk powder prices from those achieved at the previous GDT event, Kilsby noted.

Butter milk powder rose 2.7 percent to US$1,620 a tonne, and anhydrous milk fat gained 2.4 percent to US$3,724 a tonne.

The New Zealand dollar last traded at 64.86 US cents at about 11.30am in New York, compared with 64.52 US cents at 5pm in Wellington the previous day.

There were 115 winning bidders out of 156 participating bidders at the 11-round auction. The number of qualified bidders was 616, the same as at the last auction.

BusinessDesk.co.nz

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