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Dairy prices rise more than expected

NZ Newswire logoNZ Newswire 2/05/2017 Margreet Dietz

Dairy product prices have again advanced at Fonterra's GlobalDairyTrade auction, increasing for the fourth consecutive time amid strong demand.

The GDT price index climbed 3.6 per cent from the previous auction two weeks ago and the average price to $US3166 ($NZ4570). Some 22,633 tonnes of product was sold, down from 22,927 tonnes at the previous auction.

The important whole milk powder price rose 5.2 per cent to $US3233 a tonne.

"Buyer demand was robust," AgriHQ dairy analyst Susan Kilsby said in a note.

"There was strong participation in the auction by buyers from North Asia," she said.

"A lack of profitability in China's own dairy farming sector has limited expansion of some farming operations and is expected to have some impact on their domestic milk supply."

At the latest GDT auction, butter milk powder soared 21.8 per cent to $US1859 a tonne, while rennet casein jumped 10.4 per cent to $US6775 a tonne.

Anhydrous milk fat gained 4.7 per cent to $US6185 a tonne, while cheddar added 4.6 per cent to $US3666 a tonne.

Butter increased 1.1 per cent to $US4911 a tonne, while lactose rose 1.1 per cent to $US941 a tonne.

Bucking the trend, skim milk powder slipped 0.9 per cent to $US1982 a tonne.

Skim milk powder "prices remain under pressure due to the massive stocks of this product that have built up in Europe", Ms Kilsby said.

"The SMP offered by Fonterra from both New Zealand and Australia achieved a small premium over equivalent product offered by European dairy company Arla Foods."

There were 106 winning bidders out of 163 participating at the 15-round auction. The number of qualified bidders rose to 548, up from 541 at the previous auction.

"The auction extended out to 15 rounds indicating strong competition for those who were there to buy," Ms Kilsby said.

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