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Dairy product prices extend rebound

NZN 6/09/2016 Margreet Dietz

Dairy product prices have climbed at Fonterra's GlobalDairyTrade auction, adding to fresh signs of expectations that the worldwide glut is easing.

The GDT price index rose 7.7 per cent to US$2920 ($NZ3940), up from US$2731 at the previous auction three weeks ago. Some 36,748 tonnes of product was sold, down from 37,766 tonnes at the previous auction.

"This was a smaller overall lift than we saw at the last event, but is still an excellent result," AgriHQ dairy analyst Amy Van Ossenbruggen said in a note.

"While it may still be a little early to say dairy commodity prices are recovering, fundamentals are pointing towards a continued improvement in the sector."

Two weeks ago, Fonterra raised its forecast milk payout for the current season because of gains at the GDT auction on August 16.

At the latest GDT auction, whole milk powder increased 3.7 per cent to US$2793 a tonne.

"WMP volume was mostly sold through the middle of the curve-shipping November through January," according to Ms Van Ossenbruggen.

"Much of the demand at this event came from China, followed by bidders from South East Asia and Oceania."

Anhydrous milk fat rallied 15.4 per cent to US$4769 a tonne, while butter jumped 14.9 per cent to US$3764 a tonne.

"Milk fats were the stars of this auction," Ms Van Ossenbruggen noted.

Skim milk powder climbed 10 per cent to US$2224 a tonne, while cheddar rose 9 per cent to US$3436 a tonne.

Butter milk powder advanced 6.8 per cent to US$2070 a tonne, while rennet casein added 6.7 per cent to US$6720 a tonne, and lactose rose 2 per cent to US$787 a tonne.

The New Zealand dollar last traded at US74.13 cents at about 1.09pm in New York, compared with US73.05c at 5pm in Wellington the previous day.

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