SYDNEY, Dec 21 International milk prices fell
for the first time in more than two months in an auction early
on Wednesday as a recent recovery in the dairy industry
unexpectedly reversed course.
The Global Dairy Index fell 0.5 percent, with an average
selling price of $3,656 per tonne.
The fall is the first fortnightly slide since Oct. 4, ending
a rally that has seen prices rise some 20 percent.
"The index dropped 0.5 percent largely due to whole milk
powder prices softening," Susan Kilsby, dairy analyst at AgriHQ,
said in a research note.
"Fonterra increased the volume of whole milk powder on offer
... there was not quite enough demand to soak up the additional
A total of 22,321 tonnes was sold, a decrease of 0.7 percent
from the previous auction, Fonterra said.
The fall was a blow for dairy farmers who have been squeezed
after prices for dairy ingredients like milk and butter fell
sharply for more than two years by a global oversupply.
Dairy analysts had expected a continued recovery in prices
as a global supply surplus is eroded amid stronger international
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.
The kiwi was trading around $0.6912, or down 0.23 percent,
after the auction.
(Reporting by Colin Packham, editing by G Crosse)