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Dairy price rise surprises

NZ NewswireNZ Newswire 2/08/2016 By Margreet Dietz

Dairy product prices have risen more than expected at Fonterra's GlobalDairyTrade auction amid signs of a slowdown in worldwide output.

"Dairy commodity markets are waking up to the fact that milk production is slowing across the globe," AgriHQ dairy analyst Susan Kilsby said in a note.

"The majority of the extra milk produced in recent years has come from Europe-but output there is now being stemmed by low returns.

"We are still seeing growth in the US market but that is largely being taken care of by their domestic market."

The GDT price index jumped 6.6 per cent to $US2436 ($NZ3399), up from $US2336 at the previous auction two weeks ago. Some 34,928 tonnes of product was sold, up from 31,348 tonnes.

Whole milk powder rallied 9.9 per cent to $US2265 a tonne.

"It is excellent to see such a strong lift in dairy commodity prices this early in the season," Ms Kilsby said.

"New Zealand has a large volume of dairy product to trade in the coming months so it is important that these products achieve higher prices if returns to farmers are to lift."

At the GDT auction, rennet casein soared 16.3 per cent to $US6161 a tonne, while butter milk powder advanced 7.7 per cent to $US1661 a tonne.

Butter gained 6.6 per cent to $US2871 a tonne, while anhydrous milk fat rose 4.7 per cent to $US3797 a tonne.

Lactose added 3.7 per cent to $US741 a tonne, while skim milk powder increased 2.1 per cent to $US1965 a tonne.

However, cheddar fell 0.8 per cent to $US2889 a tonne.

The New Zealand dollar last traded at US72.36 cents at about 12.33pm in New York, compared with US71.72c at 5pm in Wellington the previous day.

There were 138 winning bidders out of 180 participating bidders at the 12-round auction. The number of qualified bidders rose to 605, up from 603 at the previous auction.

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