Global dairy prices rise for 11th time in a row
Global dairy prices rose for the 11th time in a row at a fortnightly auction held early on Wednesday, as waning New Zealand production provided support.
The GDT Price Index climbed 0.4pc, with an average selling price of $3,490 per tonne. The index rose 0.5pc at the previous sale, according to GDT Events.
Gains were led by anhydrous milk fat values rising 1.4pc, though top-traded product whole milk powder slipped 0.5pc.
Weak supply out of New Zealand combined with strong demand from Asia has supported this year’s rally in prices, though analysts said markets have now largely priced these factors in, contributing to sluggish whole milk powder prices.
“We anticipate that dairy prices may continue to bobble along near current levels over the next few months until markets learn more about the production outlook for the new season,” said ASB Bank economists in a research note.
ASB expects continued strength in prices when the 2019-2020 season begins in June, predicting farmgate milk prices would rise to NZ$7 per kilogram compared with dairy giant Fonterra’s forecast of NZ$6.30 to NZ$6.60 for the current season.
A total of 15,375t was sold at the latest auction, falling 4.9pc from the previous one, the auction platform said on its website.
The auction results can affect the New Zealand dollar as the dairy sector generates more than 7pc of the nation’s gross domestic product.
However, the currency was largely unchanged on Wednesday morning, trading a touch below $0.6600 as investors awaited the a central bank decision due later in the day.
GDT Events is owned by New Zealand’s Fonterra Co-operative Group Ltd but operates independently from the dairy giant.
US-listed CRA International Inc is the trading manager for the twice-monthly Global Dairy Trade auction, which is next scheduled to take place on May 21.