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Dairy price rises exceed expectations

NZN 4/04/2017 Margreet Dietz

Dairy product prices have increased at Fonterra's GlobalDairyTrade auction, rising for the second time in a row amid optimism about the outlook.

The GDT price index advanced 1.6 per cent from the previous auction two weeks ago and the average price was up to $US3005 ($NZ4309) per tonne. Some 22,642 tonnes of product was sold, up from 22,498 at the previous auction.

Whole milk powder rose 2.4 per cent to $US2924 a tonne.

"Buyers will be aware that New Zealand dairy farmers are having a strong finish to the production season which means there is extra milk powder coming on line, so in this environment it is very positive to see whole milk powder prices creeping back up," AgriHQ dairy analyst Susan Kilsby said in a note.

"The prices achieved were better than expected."

Rennet casein jumped 6.9 per cent to $US6260 a tonne, while anhydrous milk fat gained 2.5 per cent to $US5936. Lactose increased 2.2 percent to $US927.

Meanwhile, butter milk powder slumped 12.2 per cent to $US1588 a tonne, while cheddar dropped 4.4 per cent to $US3288.

Butter declined 1.6 per cent to $US4751 a tonne, while skim milk powder slipped 0.8 per cent to $US1913.

"The market for [skim milk powder] continues to be pressured by the huge volumes of product stored in Europe," Ms Kilbsy said. Cheddar was also under pressure with strong competition from European suppliers.

There were 118 winning bidders out of 157 participating at the 13-round auction. The number of qualified bidders rose to 537, up from 533 at the previous auction.

The New Zealand dollar last traded at US69.74 cents in New York, compared with US70.14c at 5pm on Tuesday in Wellington.

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