Dairy product prices slip on ample global supplies

Wednesday 6th July 2016

Dairy product prices moved lower at the Global Dairy Trade auction, with a decline in whole milk powder amid plentiful supply.

The GDT price index fell 0.4 percent to US$2,345, down from US$2,339 at the previous auction three weeks ago. Some 32,500 tonnes of product was sold, up from 23,089 tonnes at the previous auction three weeks ago.

Whole milk powder fell 1.6 percent to US$2,062 a tonne.

“The drop in the whole milk powder price indicates that demand is not currently strong enough to absorb the higher volumes of product being offered without some price correction occurring,” AgriHQ dairy analyst Susan Kilsby said in a note. “Volumes offered last night were typical levels for this time of the season. Offer volumes are forecast to continue to rise in the coming months, peaking in September.”

The AgriHQ 2016-17 milk price has eased back to $4.54 as dairy commodity prices trend down, Kilsby noted.

“Global demand for milk powder remains subdued as most buyers have sufficient stocks on hand to meet their immediate requirements therefore have little urgency to buy right now,” Kilsby said.

“Global milk supplies are starting to slow in key milk producing regions,” Kilsby said. “Total output is still growing but now at a slower rate. Stocks of dairy products are still growing—particularly in Europe and the United States.”

The AgriHQ Snapshot milk price dropped 21 cents to $3.70 per kilogram of milk solids, its lowest level in three months.

At the GDT auction, butter milk powder sank 7.5 percent to US$1,552 a tonne, while butter slid 3.1 percent to US$2,828 a tonne.

Lactose fell 1.2 percent to US$750 a tonne, while cheddar slipped 0.5 percent to US$2,902 a tonne.

Rennet casein climbed 4.9 percent to US$5,227 a tonne, while skim milk powder rose 2.6 percent to US$1,938 a tonne, and anhydrous milk fat added 1.1 percent to US$3,621 a tonne.

The New Zealand dollar last traded at 71.47 US cents at about 1.20pm in New York, compared with 72.29 US cents at 5pm in Wellington the previous day.

There were 133 winning bidders out of 164 participating bidders at the 15-round auction. The number of qualified bidders edged higher to 602, up from 601 at the previous auction.

BusinessDesk.co.nz

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