Dairy product prices drop on global supply worry
Reduction in NZ milk production offset by European dairy farmers producing more milk.
Dairy product prices fell in the latest GlobalDairyTrade auction, a second straight decline, as ample worldwide supply subdued the outlook.
The GDT average winning prices dropped 7.4% to $US2569, down from $US2735 at the previous auction two weeks ago. Some 33,997 tonnes of product was sold, down from 34,519 tonnes of product two weeks ago.
"There is ample supply of dairy product available in the global market and buyers generally have plenty of stock on hand so there is little urgency for them to secure additional stock," AgriHQ dairy analyst Susan Kilsby says in a note.
"The reduction in milk being produced in New Zealand is being offset by European dairy farmers producing more milk. Until global milk supplies drop further, prices are likely to remain subdued," Ms Kilsby says.
The AgriHQ 2015-16 farmgate milk price fell 56c to $4.71 per kilogram milksolids, which is comparable with Fonterra's current 2015-16 milk price forecast of $4.60/kgMS.
"The fall in GDT prices was larger than anticipated," according to Ms Kilsby. "The current outlook for the dairy markets means it is now unlikely Fonterra will be able to lift its farmgate milk price from its current forecast."
Rennet casein sank 11.2% to $US5469 a tonne, while butter milk powder dropped 9.4% to $US1844 a tonne. Whole milk powder retreated 8% to $US2453 a tonne while skim milk powder also fell 8%, to $US2018 a tonne.
Anhydrous milk fat declined 5.7% to $US3647 a tonne, butter decreased 5.6% to $US2574 a tonne, and cheddar gave up 4.6% to $US2987 a tonne.
The New Zealand dollar last traded at 66.58USc at about 10.05am in New York, compared with 67.44USc at 5pm in Wellington the previous day.
There were 132 winning bidders out of 151 participating bidders at the 10-round auction. The number of qualified bidders rose to 643, up from 639 at the last auction.
(BusinessDesk)
Margreet Dietz
Wed, 04 Nov 2015
Wed, 04 Nov 2015
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Dairy product prices drop on global supply worry
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