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Dairy prices slide amid high supply

NZ Newswire logoNZ Newswire 7/03/2017 Margreet Dietz

Dairy product prices have declined at the Global Dairy Trade auction, falling for a second straight auction, with supply larger than expected.

The GDT price index slid 6.3 per cent from the previous auction two weeks ago to US$3512 ($5037).

Some 22,328 tonnes of product was sold, up from 20,479 at the previous auction.

Whole milk powder sank 12.4 per cent to US$2782 a tonne.

Improved milk intakes in recent months mean Fonterra has more product available to sell than previously anticipated, AgriHQ dairy analyst Susan Kilsby said in a note.

"To see prices falling again before the market has fully recovered will be a disappointment to farmers," Ms Kilsby said.

"While one poor result doesn't have a huge impact on the milk price, it will be difficult for prices to recover quickly while there is surplus product available."

The auction's result "shows just how tightly balanced the market is-there just isn't the depth of demand in the market to absorb any extra product at the moment", Ms Kilsby said.

At the latest GDT auction, skim milk powder plunged 15.5 per cent to US$2118 a tonne, while rennet casein dropped 6.6 per cent to US$5678 a tonne.

Lactose declined 4.3 per cent to US$924 a tonne, while cheddar fell 4.2 per cent to US$3,435 a tonne, and anhydrous milk fat slipped 0.8 per cent to US$5,653 a tonne.

Meanwhile, butter milk powder jumped 8.4 per cent to US$1846 a tonne, while butter gained 1.2 per cent to US$4653 a tonne.

The New Zealand dollar last traded at US69.83c at 12.55pm in New York, compared with US69.94 USc at 5pm in Wellington the previous day.

There were 113 winning bidders out of 134 participating at the 10-round auction.

The number of qualified bidders was 530, the same as at the previous auction.

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