April 17, 2019 / 12:23 AM / 2 days ago

Global dairy prices climb higher, volumes drop at auction

WELLINGTON (Reuters) - Global dairy prices rose for a tenth consecutive time at a fortnightly auction on Wednesday, although prices for whole milk powder (WMP), the most-traded item, eased again due to lower demand.

The GDT Price Index climbed 0.5 percent, with an average selling price of $3,447 per tonne. This was slower that the 0.8 pct rise in the previous auction, according to GDT Events.

Whole milk powder average prices eased by 0.7 percent, the second fall in a row.

“We think this is some of the supply premium coming out of prices as concern about the impact of dry weather on NZ milk production eases,” Westpac senior economist Anne Boniface said in a note.

But Anhydrous milkfat (AMF) and butter continued their strong performance with the price indices up 4.2 percent and 3.5 percent respectively.

A total of 16,166 tonnes was sold at the latest auction, falling 9.5 percent from the previous one, the auction platform said on its website.

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 kiwi currency was trading down 1.3 percent at its lowest since Jan. 2, but the decline followed the release on Wednesday of softer than expected CPI data.

GDT Events is owned by New Zealand’s Fonterra Co-operative Group Ltd, but operates independently from the dairy giant. The auctions are held twice a month, with the next one scheduled for May 7.

Fonterra, which is owned by about 10,500 farmers, controls nearly a third of the world dairy trade.

Reporting by Praveen Menon; editing by Richard Pullin

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