Dairy product prices fell for the fifth consecutive GlobalDairyTrade auction overnight, pushing the GDT Price Index to its lowest level since August 2009 and adding to the pressure on the one in four dairy farmers the Reserve Bank says have negative cash flow this season.
The GDT average winning price fell 2.2 per cent to US$2,472 from US$ 2,515 at the previous auction two weeks ago. Some 26,535 tonnes of product was sold, down from 27,369 tonnes in the previous auction.
Low prices are seen as one of three key risks to New Zealand's financial stability if they were to persist, the Reserve Bank said in its financial stability report last week. Governor Graeme Wheeler told the parliament's finance and expenditure committee that another year of low prices "would be a worry for the economy." The New Zealand dollar recently traded at 73.40 US cents from 73.65 cents before the auction results were released.
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Whole milk powder, the biggest product by volume offered on the GDT platform, fell 0.5 per cent to US$2,390 a tonne, slowing from the 1.8 per cent decline in the previous auction while taking its decline since late February to 27 per cent.
Butter milk powder rose 3.2 per cent to US$1,930 a tonne, lifting the price from its lowest level in more than a year. Rennet casein fell 0.4 per cent to US$6,067 a tonne. Skim milk powder declined 3.6 per cent to US$1,992 a tonne, while anhydrous milk fat dropped 4.8 per cent to US$3,337 a tonne.
Butter fell 3.2 per cent to US$2,911 a tonne and cheddar fell 7.1 per cent to US$2,745 a tonne. Sweet whey powder was not offered at the latest event, while lactose rose 0.9 per cent to $580 a tonne.
There were 128 winning bidders out of 162 participating bidders at the 14-round auction. The number of qualified bidders rose to 687 from 685 at the last auction.