Prices dip in overnight dairy auction

Fonterra is poised for a record production season. Photo / File

Dairy prices have dipped 1.1 per cent in the latest international online dairy auction held overnight.

Whole milk powder prices fell 0.1 per cent, while skim milk powder prices dropped 1.5 per cent.

The trade weighted, all products average fell 1.1 per cent from the last auction held two weeks ago.

See more details of the auction here.

The next auction is on June 1.

The stable and high world prices come as Fonterra - the world's largest dairy exporter - confirmed yesterday that it was on track for a record production season.

Production is more than 4 per cent ahead of the same time last year, when much of the country was experiencing dry or drought conditions.

Fonterra, which collected about 89 per cent of national milk production in 2009-10, is forecasting a payout for the 2010-11 season of $7.90-$8 per kilogram of milksolids before retentions - potentially a record result.

There are two weeks left in the season.

An $8 payout based on a 4 per cent rise in production could be worth about $10.7 billion - potentially $412 million higher than if production had been unchanged.

Recent excellent pasture growth has meant dairy herds are now in good condition, which bodes well for calving and the start of new season.

The ANZ Commodity Price Index for dairy products dropped 2.6 per cent in April, having in March hit the highest level since May 2008.

ANZ said dairy products during the 12 months to March accounted for more than $11.6 billion out of a total $44.2 billion of overseas merchandise trade.

The globaldairytrade auctions currently sell nearly 600,000 tonnes - about a quarter of Fonterra production - annually and have run up sales of $3.2 billion since they were launched in July, 2008.

The auction has more than 300 registered bidders, in 58 countries.

- NZ HERALD ONLINE