Dairy prices slip on global glut

Dairy product prices slipped as a gain in whole milk powder prices, reflecting lower local supplies at the auction, was offset by a decline in other products including skim milk powder amid an unabated international glut.

The GDT price index fell 1.4% to $US2203, down from $US2,263 at the previous auction two weeks ago. Some 20,615 tonnes of product was sold, down from 21,206 tonnes at the previous auction two weeks ago.

Whole milk powder rose 0.7% to $US2176 a tonne.

"The lift in whole milk powder prices on GDT was supported by the lower volumes on offer as we near the end of New Zealand's milk production season," AgriHQ dairy analyst Susan Kilsby said in a note.

"The weakness in the other dairy commodities is not surprising given these commodities are influenced to a much greater degree by supply from the northern hemisphere," Ms Kilsby said. "Milk production in both Europe and the US remains strong."

There was just 7500 tonnes of whole milk powder available at the GDT event, compared with 20,700 tonnes a year ago, according to Ms Kilsby.

The AgriHQ 2015-16 Farmgate Milk Price rose a couple of cents to $4.11 per kilogram milk solids.

"A lift in the price of futures contracts trading on the NZX Dairy Derivatives market provided some support to this price," Ms Kilsby said.

The AgriHQ 2016-17 Farmgate Milk Price advanced to $4.76/kgMS. This price assumes whole milk powder prices will continue to rise in the coming months and reach US$2,500 by the end of the calendar year, Ms Kilsby said.

In the GDT auction, butter milk powder dropped 5.5% to US$1,366 a tonne, while butter declined 5.5% to US$2,601 a tonne.

Skim milk powder fell 3.6% to $US1676 a tonne, while lactose decreased 2.7% to $US693 a tonne, and anhydrous milk fat slipped 1.6% to $US3195 a tonne.

Meanwhile, cheddar rose 1.8% to $US2727 a tonne, while rennet casein rose 3.5% to $US5024 a tonne.

The New Zealand dollar last traded at 69.25USc at about 12.55pm in New York, compared with 70.20USc at 5pm in Wellington the previous day.

There were 118 winning bidders out of 147 participating bidders at the 12-round auction. The number of qualified bidders rose to 620, from 617 at the previous auction.

Source: GlobalDairyTrade.info (Click to zoom)

(BusinessDesk)