Dairy product prices rise amid tightening supply

Dairy product prices rose at the Global Dairy Trade auction overnight, gaining for the seventh time in eight fortnightly auctions, amid supply decreases (scroll down for charts).

The GDT price index increased 4.5 percent to US$3,519, up from US$3,327 at the previous auction two weeks ago. Some 23,902 tonnes of product was sold, down from 27,735 tonnes at the previous auction.

Whole milk powder added 3.2 percent to US$3,423 a tonne.

Last month Fonterra said it reduced its forecast milk volume for the 2016-17 season in New Zealand.

"Tightening milk supplies in both New Zealand and Australia has put pressure on suppliers with some dairy companies struggling to meet contracted delivery times," AgriHQ dairy analyst Susan Kilsby said in a note. "This has left a few buyers with low supplies on hand putting some urgency into the market."

Still, "the lift was a little less than the market had anticipated," according to Kilsby.

At the latest GDT auction, butter milk powder jumped 13.3 percent to US$2,623 a tonne, while cheddar climbed 11 percent to US$3,697 a tonne.

Skim milk powder rallied 9.8 percent to US$2,562 a tonne, while lactose advanced 4.6 percent to US$787 a tonne.

Anhydrous milk fat rose 4.4 percent to US$5,348 a tonne, while butter added 1.1 percent to US$4,193 a tonne, and rennet casein edged 0.6 percent higher to US$6,040 a tonne.

Source: GlobalDairyTrade. Click to zoom.

The New Zealand dollar last traded at 70.93 US cents at about 11.31am in New York, compared with 71.18 US cents at 5pm in Wellington the previous day.

There were 106 winning bidders out of 164 participating at the 18-round auction. The number of qualified bidders held steady at 510, the same as at the previous auction.

(BusinessDesk)