April 4, 2017 / 8:22 PM / 8 months ago

UPDATE 1-Dairy prices rise, suggesting recovery back on track

 (Adds analyst comment, details, market reaction)
    By Charlotte Greenfield
    WELLINGTON, April 5 (Reuters) - Global dairy prices rose for
the second time in a row at an international auction on
Wednesday, strengthening hopes that last year's recovery is back
on track. 
    Farmers and analysts had been concerned that a 50 percent
rebound in prices during 2016, after two years of falls, could
be temporary since prices were dented at the beginning of the
new year as global supply increased.
    The Global Dairy Trade Price Index climbed 1.6 percent, with
an average selling price of $3,005 per tonne, in the auction
held on early on Wednesday. The index rose 1.7 pct at the
previous sale.
    "Buyers will be aware that NZ dairy farmers are having a
strong finish to the production season which means there is
extra milk powder coming on line, so in this environment it is
very positive to see whole milk powder prices creeping back up,"
said Susan Kilsby, dairy analyst at Agri HQ. 
    Prices for whole milk powder rose 2.4 percent, while skim
milk powder fell 0.8 percent.
    The auction results can affect the New Zealand dollar       
as the dairy sector generates more than 7 percent of the
nation's gross domestic product.
    The currency traded up a touch at $0.6986 immediately after
auction, but fell to $0.6974 during the early hours of the
morning as investors turned their attention to risks linked to a
U.S./China summit.
    GDT Events is owned by New Zealand’s Fonterra Co-operative
Group Ltd         , but operates independently from the dairy
giant. U.S.-listed CRA International Inc          is the trading
manager for the twice-monthly Global Dairy Trade auction.
    A number of companies, including Dairy America and Murray
Goulburn         , use the platform to sell milk powder and
other dairy products.
    A total of 22,642 tonnes was sold at the latest auction, an
increase of 0.6 percent from the previous one, the auction
platform said on its website 
    The auctions are held twice a month, with the next one
scheduled for April 18. 

 (Reporting by Charlotte Greenfield; editing by John

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