Dairy Prices Fall, Volumes Drop at Auction

Global dairy prices dropped for the third consecutive time at a fortnightly auction on Wednesday as production in New Zealand continued its slow pickup from weaker levels earlier in the season.

The world's largest dairy exporter curbed its supply late last year due to unusually dry weather, but the pasture conditions have since improved.

The Global Dairy Trade Price Index dipped 1.2 percent, with an average selling price of $3,632 per tonne, auction platform GDT Events said. The index fell 0.6 pct at the previous sale. (www.globaldairytrade.info)

A total of 18,635 tonnes was sold at the latest auction, falling 3.4 percent from the previous one. The auctions are held twice a month, with the next one scheduled for April 3.

"We expect prices to remain at or around current levels until the end of the season," Nathan Penny, senior rural economist at ASB, said in a note.

"While (New Zealand) production is improving, the recovery from weak production earlier in the season is progressing only gradually. With global demand also firm, we expect the global dairy market will remain largely balanced and for prices to track sideways as a result."

The New Zealand dollar fell to its lowest level since early February at $0.7177. The dairy sector generates more than 7 percent of the nation's gross domestic product.

The New Zealand milk co-operative, which is owned by about 10,500 farmers, controls nearly a third of the world dairy trade.

GDT Events is owned by New Zealand’s Fonterra Co-operative Group Ltd , but operates independently from the dairy giant. U.S.-listed CRA International Inc is the trading manager for the twice-monthly Global Dairy Trade auction.

A number of companies, including Dairy America and Murray Goulburn, use the platform to sell milk powder and other dairy products.

 

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