Dairy product prices rise more than expected

Wednesday 3rd May 2017

Dairy product prices advanced at the Global Dairy Trade auction, increasing for the fourth consecutive time amid strong demand.

The GDT price index climbed 3.6 percent from the previous auction two weeks ago to US$3,166. Some 22,633 tonnes of product was sold, down from 22,927 tonnes at the previous auction.

Whole milk powder rose 5.2 percent to US$3,233 a tonne.

“Buyer demand was robust,” AgriHQ dairy analyst Susan Kilsby said in a note.

“There was strong participation in the auction by buyers from North Asia,” according to Kilsby. “A lack of profitability in China's own dairy farming sector has limited expansion of some farming operations and is expected to have some impact on their domestic milk supply.”

At the latest GDT auction, butter milk powder soared 21.8 percent to US$1,859 a tonne, while rennet casein jumped 10.4 percent to US$6,775 a tonne.

Anhydrous milk fat gained 4.7 percent to US$6,185 a tonne, while cheddar added 4.6 percent to US$3,666 a tonne.

Butter increased 1.1 percent to US$4,911 a tonne, while lactose rose 1.1 percent to US$941 a tonne.

Bucking the trend, skim milk powder slipped 0.9 percent to US$1,982 a tonne.

Skim milk powder “prices remain under pressure due to the massive stocks of this product that have built up in Europe,” Kilsby said. “The SMP offered by Fonterra from both New Zealand and Australia achieved a small premium over equivalent product offered by European dairy company Arla Foods.”

The New Zealand dollar last traded at 69.25 US cents at 1.06pm in New York, compared with 69.07 US cents at 5pm in Wellington the previous day.

There were 106 winning bidders out of 163 participating at the 15-round auction. The number of qualified bidders rose to 548, up from 541 at the previous auction.

"The auction extended out to 15 rounds indicating strong competition for those who were there to buy," said Kilsby.

(BusinessDesk)

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