May 15, 2018 / 10:13 PM / in 10 months

UPDATE 1-Dairy prices jump to eight-month high, but whole milk powder lags

    * Dairy prices jump 1.9 pct
    * Highest average price in eight months
    * Prices for whole milk powder relatively flat

 (Recasts; adds market reaction)
    By Charlotte Greenfield
    WELLINGTON, May 16 (Reuters) - Global dairy prices rose to a
nine-month high at a fortnightly auction held early on Wednesday
but prices for the key product, whole milk powder, were largely
    The Global Dairy Trade (GDT) Price Index climbed 1.9 percent
to an average selling price of $3,637 per tonne in the auction
held in the early hours of the morning.
    That suggested a 1.1 percent drop at the previous sale was a
temporary dip and the gradual recovery in prices was back on
    Gains were led by anhydrous milk fat, which rose 5.8
percent, while skim milk powder jumped 3 percent. 
    "Skim milk powder (SMP) was also stronger than expected,"
said Amy Castleton, dairy analyst at AgriHQ. "SMP likely found
some support from less product being available."
    However, whole milk powder, the most-traded item, was only
up a touch at 0.2 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.
    But the tepid result for whole milk powder, the country's
main goods export, and a rally in the U.S. dollar        meant
investors largely ignored the auction and the currency dropped
to a six-month low of $0.6862. 
    A total of 18,161 tonnes was sold at the latest auction,
falling 6.9 percent from the previous one, the auction platform
    GDT Events, which runs the auction, 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.
    The next auction is scheduled for June 5.

 (Reporting by Charlotte Greenfield and Bangalore Commodities
Editing by James Dalgleish)
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