Dairy product prices advance for third straight auction

Dairy product prices rose in the latest GlobalDairyTrade auction, climbing for a third straight auction after nearly six months of declines. 

The GDT average winning prices jumped 16.5 percent to US$2,568, up from US$2,226 at the previous auction two weeks ago. It was the largest price increase in five years, according to AgriHQ dairy analyst Susan Kilsby. Some 36,050 tonnes of product was sold, up from 35,865 tonnes of product two weeks ago. 

The increase was larger than expected. The volume of whole milk powder offered was 5 percent lower than at the previous auction and 43 percent less than a year ago.

“The lower volumes of product offered on GDT along with expectations that New Zealand milk production will fall this season are the factors pushing prices higher,” Kilsby said in a note.

“Buyers are aware that a drier than normal summer will slow milk output in New Zealand, therefore we are starting to see a little more urgency from buyers wishing to secure purchases,” according to Kilsby.

The AgriHQ 2015-16 Farmgate Milk Price has increased 46 cents to $4.65 per kilogram of milksolids, compared with Fonterra’s milk price forecast of $3.85/kgMS.

Whole milk powder soared 20.6 percent to US$2,495 a tonne, while skim milk powder rallied 17.0 percent to US$1,992 a tonne.

Anhydrous milk fat climbed 13.7 percent to US$3,440 a tonne, while butter rose 13.3 percent to US$3,108 a tonne.

Cheddar increased 10.7 percent to US$3,206 a tonne, while lactose gained 3.1 percent to US$499 a tonne, and rennet casein added 0.6 percent to US$5,807 a tonne.

Butter milk powder fell 1.9 percent to US$1,719 a tonne.

The New Zealand dollar last traded at 63.23 US cents at about 1.20pm in New York, compared with 63.31 US cents at 5pm in Wellington the previous day. Earlier in the session the kiwi had fallen as low as 62.94 US cents.

There were 121 winning bidders out of 186 participating bidders at the 18 round auction. The number of qualified bidders rose to 639, from 635 at the last auction.

BusinessDesk.co.nz

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