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Dairy prices up for second time

NZN 1/06/2016 Jonathan Underhill

Dairy product prices have increased for the second GlobalDairyTrade auction in a row, led by butter milk powder and skim milk powder, while whole milk powder declined.

The GDT price index rose 3.4 per cent to $US2329 ($NZ3443) per metric tonne, up from $US2283 and the second-largest gain this year. Some 24,046 tonnes of product was sold, up from 18,113 tonnes at the previous auction two weeks ago.

Skim milk powder rose 12 per cent to $US1867 a tonne and whole milk powder, typically the biggest product on offer by volume, fell 1.7 per cent to $US2205 a tonne. The price of whole milk powder is less than half the level it peaked at in April 2013 of $US5245 a tonne but had been broadly recovering since mid-February.

The sale on Wednesday night is the first since Fonterra gave its forecast for the farmgate milk payout for 2016/17, raising it to a lower-than-expected $4.25 per kilogram of milk solids from $3.90/kgMS payment for the 2015/16 season and heralding the third straight season where the price paid is below break even for most farmers.

Weak world prices have prompted both Fonterra and Murray Goulburn to cut their payout forecasts across the Tasman.

Butter milk powder rose 14.2 per cent to $US1765 a tonne, having soared 16.2 per cent in the last auction , and is now at the highest level since November last year.

Anhydrous milk fat rose 2.8 per cent to $US3444 a tonne and lactose gained 4.7 per cent to $US750 a tonne. Butter rose 3.2 per cent to $US2762 a tonne and rennet casein fell 1.6 per cent to $US5035 a tonne. Cheddar rose 7.8 per cent to $US2669 a tonne.

The New Zealand dollar recently traded at 68.17 US cents, up from 67.85 cents in late Wellington trading on Wednesday.

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