Dairy prices rise for second time in 2016

Dairy product prices rose, the second advance in the seven Global Dairy Trade auctions so far in 2016. The GDT price index rose 2.1%.

USThe average price slipped to $2188, down from US$2,190 at the previous auction three weeks ago. Some 22,682 tonnes of product was sold, up from 20,406 tonnes at the previous auction three weeks ago.

Whole milk powder rose 1.5% to $US2013 a tonne.

"It was a pleasant surprise to see some prices lift on the GDT auction overnight as there is not a lot of positivity in the market at present," AgriHQ dairy analyst Susan Kilsby said in a note.

"In Europe product continues to flood into the government-backed intervention programmes as milk production continues to expand."

Following the GDT auction, the AgriHQ 2015-16 Farmgate Milk Price has fallen 8c to $4.06 per kilogram milksolids. This compares to Fonterra's current forecast of $3.90/kgMS.

The fall in the AgriHQ 2015-16 milk price forecast was primarily driven by prices easing in the NZX Dairy Futures market over the past three weeks, according to Ms Kilsby.

Rennet casein climbed 11.8% to $US4438 a tonne, while cheddar advanced 10.5% to $US2778 a tonne.

Source: GlobalDairyTrade.info. Click to zoom.

Source: GlobalDairyTrade.info. Click to zoom.

Anhydrous milk fat prices increased 6.7% to $3203 a tonne, lactose rose 6.2% to $US661 a tonne, while skim milk powder edged 0.1% higher to $US1721 a tonne.

"The majority of Europe's extra milk is being made into skim milk powder and butter, which will keep prices for these commodities subdued for some time," Ms Kilsby noted. "However, the price of whole milk powder and anhydrous milk fat is less influenced by the European market. A decrease in New Zealand's milk supply will provide some support to the price of these two commodities."

Butter fell 2% to $US2702 a tonne while butter milk powder dropped 8.2% to $US1395 a tonne.

The New Zealand dollar last traded at 68.02USc at about 11.40am in New York, compared with 68.34USc at 5pm in Wellington the previous day.

There were 119 winning bidders out of 163 participating bidders at the 15-round auction. The number of qualified bidders rose to 615, up from 606 at the previous auction.

(BusinessDesk)