Dairy product prices dip for first time in five auctions

Wednesday 21st October 2015

Dairy product prices slipped in the latest GlobalDairyTrade auction, declining for the first time in five auctions, tempering expectations about the outlook.

The GDT average winning prices fell 3.1 percent to US$2,735, down from US$2,834, which marked the highest level since March, at the previous auction two weeks ago. Some 34,519 tonnes of product was sold, down from 35,243 tonnes of product two weeks ago.

The AgriHQ 2015-16 Farmgate Milk Price decreased 13 cents to $5.26 per kilogram milksolids, compared with Fonterra’s 2015-16 milk price forecast of $4.60/kgMS.

“The slowdown in the recovery of the dairy markets will be disappointing for dairy farmers whose cash-flows have been squeezed by two seasons of low milk prices,” AgriHQ dairy analyst Susan Kilsby said in a note.

Two weeks ago, New Zealand dairy futures showed expectations whole milk powder would climb to US$3,000 a tonne by the end of 2015 but this price now is not expected to be achieved until May 2016.

“While the market had generally eased, the results of the latest GDT auction still came as a surprise,” Kilsby noted. “The NZX Dairy Derivatives market had predicted both whole milk powder and skim milk powder prices would lift again” at this auction.

Butter sank 11.1 percent to US$2,850 a tonne, while whole milk powder dropped 4.6 percent to US$2,694 a tonne. Skim milk powder fell 4.5 percent to US$2,178 a tonne, while lactose retreated 3.8 percent to US$507 a tonne, and cheddar declined 2.2 percent to US$3,163 a tonne.

Rennet casein gained 2.1 percent to US$6,178 a tonne, anhydrous milk fat increased 2.4 percent to US$3,856 a tonne, while butter milk powder added 3.2 percent to US$2,064 a tonne.

The New Zealand dollar last traded at 67.55 US cents at about 1.05pm in New York, compared with 67.91 US cents at 5pm in Wellington the previous day.

There were 127 winning bidders out of 163 participating bidders at the 12-round auction. The number of qualified bidders rose to 639, up from 635 at the last auction.

BusinessDesk.co.nz

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