Global Dairy Prices Fall, Muted By Ramped-Up New Zealand Supply
Global dairy prices fell from nine-month highs hit the previous month at a fortnightly auction held early on Wednesday, as strong supply muted buyers' willingness to pay for key products such as whole-milk powder.
The GDT Price Index dipped 1.3%, to an average selling price of $3,487 per tonne, in the auction held in the early hours of the morning, after jumping 1.9% at the previous auction.
That pointed to possible wobbles in a recovery that had seen New Zealand dairy company Fonterra Co-operative Group Ltd lift its forecast payout prices to farmers just the previous month.
Prices for whole-milk powder (WMP), the most widely traded product at the auction, dropped 1.1%, as buyers were faced with stronger supply, largely due to production in New Zealand, the world's largest dairy exporter, picking up after being hampered by bad weather earlier in the year.
Fonterra had said on Tuesday that its total New Zealand milk production in April rose 3%, driven largely by more favourable weather conditions.
"Buyers did purchase more WMP than they did at the May 15 event, but they were unwilling to pay more for it," said Amy Castleton, a dairy analyst at AgriHQ.
A total of 21,580 tonnes was sold at the latest auction – an increase of 18.8% on the previous one.
The auction results can affect the New Zealand dollar, as the dairy sector generates more than 7% of the nation's gross domestic product.
GDT Events is owned by Fonterra, but operates independently from the dairy company.
The New Zealand milk co-operative, which is owned by about 10,500 farmers, controls nearly a third of the world's dairy trade.