Dairy prices rise for the first time in 2016

Dairy product prices rose in the latest GlobalDairyTrade auction, stemming four consecutive slides, as whole milk powder prices moved higher across all contract periods.

The GDT average winning price gained 1.4% to $US2253, up from $US2235 at the previous auction two weeks ago. Some 21,880 tonnes of product was sold, down from 22,021 tonnes at the previous auction two weeks ago.

The AgriHQ 2015-16 Farmgate Milk Price rose 9c to $4.14 per kilogram milksolids, compared with Fonterra's current 2015-16 milk price forecast of $4.15/kgMS.

"While this result is great news for New Zealand's dairy farmers, a sustained price recovery is likely to be some way off," AgriHQ dairy analyst Susan Kilsby said in a note. "Overall market sentiment still remains very bearish as global milk production is still expanding and stocks of dairy commodities are building."

"China is currently a bright spot, as this market is expected to import a little more milk powder this year as imported product is substantially cheaper than producing milk in China," Ms Kilsby noted. "But China alone is unlikely to soak up all the excess milk that will become available this year – hence a sustained price recovery is not expected to happen quickly."

Source: GlobalDairyTrade.info. Click to zoom

Source: GlobalDairyTrade.info. Click to zoom

Rennet casein jumped 14.9% to $US4569 a tonne, while lactose climbed 7.9% to $US613 a tonne.

Whole milk powder increased 5.5% to $US1974 a tonne while skim milk powder gained 1.3% to $US1802 a tonne.

Anhydrous milk fat dropped 8.3% to $US3254 a tonne while butter milk powder fell 2.9% to $US1452 a tonne.

Cheddar slipped 0.7% to $US2528 a tonne, while butter eased 0.5% to $US2811 a tonne.

The New Zealand dollar last traded at 66.14USc at about 11.35am in New York, compared with 65.90USc at 5pm in Wellington the previous day.

There were 122 winning bidders out of 160 participating bidders at the 14-round auction. The number of qualified bidders rose to 607, up from 604 at the previous auction.

(BusinessDesk)