Dairy product prices advance for third straight auction
The GDT average winning prices surge — but are still well below the level on which Fonterra's current forecast payout is predicated.
See also: Dairy production to ‘fall hard’ this season
Dairy product prices rose in the latest GlobalDairyTrade auction, climbing for a third straight auction after nearly six months of declines.
The GDT average winning prices jumped 16.5% to $US2568, up from $US2226 at the previous auction two weeks ago (Fonterra's current forecast payout to farmers is based on $US3000 per tonne). It was the largest price increase in five years, according to AgriHQ dairy analyst Susan Kilsby. Some 36,050 tonnes of product was sold, up from 35,865 tonnes of product two weeks ago.
The increase was larger than expected. The volume of whole milk powder offered was 5% lower than at the previous auction and 43% less than a year ago.
"The lower volumes of product offered on GDT along with expectations that New Zealand milk production will fall this season are the factors pushing prices higher," Ms Kilsby said in a note.
"Buyers are aware that a drier-than-normal summer will slow milk output in New Zealand. We are starting to see a little more urgency from buyers wishing to secure purchases," according to Ms Kilsby.
The AgriHQ 2015-16 Farmgate Milk Price has increased 46c to $4.65 per kilogram of milksolids, compared with Fonterra's milk price forecast of $3.85/kgMS.
Whole milk powder soared 20.6% to $US2495 a tonne, while skim milk powder rallied 17.0% to $US1992 a tonne.
Anhydrous milk fat climbed 13.7% to US$US3440 a tonne, while butter rose 13.3% to US$3,108 a tonne.
Cheddar increased 10.7% to $3206 a tonne, while lactose gained 3.1% to $US499 a tonne, and rennet casein added 0.6% to $US5807 a tonne.
Butter milk powder fell 1.9% to $US1719 a tonne.
The New Zealand dollar last traded at 63.23USc at about 1.20pm in New York, compared with 63.31USc at 5pm in Wellington the previous day. Earlier in the session the kiwi had fallen as low as 62.94USc.
There were 121 winning bidders out of 186 participating bidders at the 18-round auction. The number of qualified bidders rose to 639, from 635 at the last auction.
(BusinessDesk)
Margreet Dietz
Wed, 16 Sep 2015
Wed, 16 Sep 2015
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Dairy product prices advance for third straight auction
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