Dairy prices firm 2.6pc at last GDT sale of season

Photo / John Stone

Dairy prices ended the 2015/6 season on a firm note with the GlobalDairyTrade price index rising by 2.6 per cent at this morning's auction.

The average winning price across the auction was US$2283 a tonne.

Prices for the all-important whole milk powder firmed by 3.0 per cent to US$2252 a tonne while the another key product for New Zealand producers - skim milk powder - dropped by 0.9 per cent to US$1658 a tonne.

Elsewhere, anhydrous milk fat prices gained 4.9 per cent to US$3340 a tonne while butter gained 3.8 per cent to US$2697 a tonne. Butter milk powder shot up by 16.2 per cent to an average US$1545/tonne.

AgriHQ dairy analyst Susan Kilsby said the lift in whole milk powder prices on GDT was supported by the fact that the volume made available by Fonterra for sale on the platform was the lowest it had offered to the market in more than three years.

"The GDT result last night was positive with the market now heading in the right direction, but the result was off low volumes," she said in a commentary. "Hopefully the market can sustain this positive direction as offer volumes start to increase in the coming months."

Skim milk powder continued to be under pressure as large quantities of this product continue to enter storage programmes in the European Union, which was keeping prices in check, Kilsby said.

AgriHQ forecasts a lift in the milk price forecast for next season to $4.64 per kg of milksolids.

Fonterra's farmgate milk price forecast for the current season, which ends on May 31, is $3.90 a kg of milksolids compared with Dairy NZ's estimate of breakeven of $5.25 a kg.

The co-operative will later this month issue its forecast for 2016/7 and analysts are picking a milk price of around $4.50 a kg.

Volumes at this morning's auction were very light.

"It was not a terrible result but it was not a terribly good one either," Jon Spainhour , a broker and partner at Chicago-based dairy specialist Rice Dairy, said.

"There is momentum but we are still treading around the bottom, particularly for skim milk powder," he said.