July 4, 2017 / 10:07 PM / a month ago

UPDATE 1-Dairy prices fall, volumes increase at auction -GDT Events

 (Recasts, adds analyst comment, market reaction)
    WELLINGTON, July 5 (Reuters) - Global dairy prices continued
to moderate after a strong run earlier in the year at a
fortnightly auction on Wednesday, although closely watched whole
milk powder prices rose.
    The Global Dairy Trade (GDT) Price Index dipped 0.4 percent,
with an average selling price of $3,303 per tonne, in the
auction held in the early hours of Wednesday. The index had
slipped 0.8 pct at the previous sale.
    After two years of declining prices, farmers and analysts
had been concerned that a 50 percent rebound during 2016 could
be temporary, but prices got back on track the past few months
as global supply tightened.
    Losses were lead by anhydrous milk fat, which fell 3.5
percent, while butter milk powder fell 10.8 percent.
    "There has been concern that buyers would no longer be able
to absorb the record prices that these two commodities have been
hitting, though it is too early to tell whether this is the
start of a longer term downward trend," AgriHQ analyst Amy
Castleton said in a research note.
    Nevertheless, whole milk powder, the key export for New
Zealand rose 2.6 percent. 
    The auction results can affect the New Zealand dollar
         as the dairy sector generates more than 7 percent of
the country's gross domestic product, but reaction was
relatively muted. The Kiwi was trading down at $0.7288 on
Wednesday morning from $0.7300 the previous day.
    GDT Events is owned by New Zealand’s Fonterra Co-operative
Group Ltd         , the world's largest exporter of dairy, but
operates independently from the company.
    U.S.-listed CRA International Inc          is the trading
manager for the twice-monthly Global Dairy Trade auction.
A total of 28,574 tonnes were sold at the latest auction, an
increase of 35 percent from the previous one
    The auctions are held twice a month, with the next one
scheduled for July 18.
    


 (Reporting by Charlotte Greenfield; Editing by Peter Cooney)
  

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