Dairy prices back on the up

Dairy product prices increased at the Global Dairy Trade auction, with gains in the price for whole milk powder exceeding expectations amid the lowest amount on offer in three years.

The GDT price index rose 2.6% to $US2283, up from $US2203 at the previous auction two weeks ago. Some 18,113 tonnes of product was sold, down from 20,615 tonnes at the previous auction two weeks ago.

Whole milk powder increased 3.0% to $US2252 a tonne.

"The lift in whole milk powder prices on GDT was supported by the low volumes of whole milk powder currently on offer," AgriHQ dairy analyst Susan Kilsby said in a note.

The volume of whole milk powder Fonterra made available for sale on GDT was the lowest it has offered to the market in more than three years, Ms Kilsby said.

Fonterra expects to collect a total of 1588 million kilogram of milk solids in the 2015-16 season for which milk collections conclude at the end of this month. This is 3% less milk than collected the previous season, Ms Kilsby said.

GlobalDairyTrade. Click to zoom.

GlobalDairyTrade. Click to zoom.

"Despite the reduced milk flows Fonterra has still been selling product at a similar rate to last season, which has resulted in a reduction in stock levels," Ms Kilsby said.

The AgriHQ 2015-16 forecast is unchanged at $4.11 per kilogram of milk solids as a small lift in dairy commodity prices recorded at the GDT event was offset by lower futures prices, according to Ms Kilsby.

AgriHQ forecasts a slight lift in the milk price forecast for next season, according to Ms Kilsby. The AgriHQ 2016-17 milk price currently sits at $4.64/kgMS.

Meanwhile, a flood of milk means that US consumers are paying the lowest prices for retail milk in six years, US government data showed Tuesday.

At the GDT auction, butter milk powder soared 16.2% to $US1545 a tonne, while anhydrous milk fat climbed 4.9% to $US3340 a tonne.

Lactose gained 3.9% to $US713 a tonne, and butter added 3.8% to $2697 a tonne, while rennet casein inched 0.3% higher to US$US5,060 a tonne.

Skim milk powder fell 0.9% to $US1658 a tonne, while cheddar slipped 0.8% to $US2693 a tonne.

There were 111 winning bidders out of 155 participating bidders at the 14-round auction. The number of qualified bidders rose to 623, from 620 at the previous auction.

(BusinessDesk)