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Dairy prices slip at auction

NZ NewswireNZ Newswire 5/07/2016

Dairy prices have slipped 0.4 per cent at Fonterra's fortnightly GlobalDairyTrade auction.

Some had been expected a lift of up to 5 per cent, but the GDT index slipped to $US2,345 ($NZ3,247) per metric tonne on Wednesday morning, with the important whole milk powder price dipping 1.6 per cent to $US,2062.

Butter was also down, 3.1 per cent to $US2,828, and cheddar slipped 0.5 per cent to $US2,902.

It was just the second drop in auction prices since March as analysts believe prices for New Zealand's single biggest export will reverse their downward slide.

"The drop in the whole milk powder price indicates that demand is not currently strong enough to absorb the higher volumes of product being offered without some price correction occurring," AgriHQ dairy analyst Susan Kilsby said.

"Volumes offered last night were typical levels for this time of the season. Offer volumes are forecast to continue to rise in the coming months, peaking in September."

The AgriHQ 2016-17 milk price has eased back to $4.54 as dairy commodity prices trend down.

"Global demand for milk powder remains subdued as most buyers have sufficient stocks on hand to meet their immediate requirements therefore have little urgency to buy right now," Ms Kilsby said.

"Global milk supplies are starting to slow in key milk producing regions," she said. "Total output is still growing but now at a slower rate. Stocks of dairy products are still growing - particularly in Europe and the United States."

The New Zealand dollar last traded at 71.47 US cents at about 1.20pm in New York, compared with 72.29 US cents at 5pm in Wellington the previous day.

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