Dairy prices rise slightly at latest GDT auction

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For the third time a row, dairy prices have risen in the Global Dairy Trade auction - up 0.4 per cent across the board.

Whole milk powder prices - the biggest influencer on Fonterra's farmgate milk price - remained buoyant, with a 0.3 per cent lift to US$3,037/MT; while the second biggest "reference" product for Fonterra – skim milk powder – fell back 0.2 per cent to an average US$2851/MT.

The biggest increases came from butter – up 3.3 per cent to US$3678/MT, and cheddar – up 3.0 per cent to US$3803/MT.

Prices for the other main commodity groups decreased. Anhydrous milk fat slid 0.5 per cent to US$4110/MT, and lactose dropped sharply - down 8.0 per cent to US$1087/MT.

A total of 34,648MT of product was sold, attracting 164 bidders over 16 rounds.

In a market update on October 15, Fonterra increased the midpoint of its forecast farmgate milk price for the 2020/21 season by 40 cents to $6.80, but retained its $1 range of between $6.30 and $7.30.

The move was driven by improved demand out of China. At $6.80, the price would be one of the highest paid by the co-op, adding $10 billion to regional New Zealand.

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The latest GDT auction was a "good result," Fonterra Managing Director of Co-operative Affairs Mike Cronin said.

There were also "good volumes out on the GDT" for October and November, as Fonterra was at the peak of its season, Cronin told The Country's Jamie Mackay.

"We're picking up milk on-farm every nine seconds at the moment."

As for the increase in the midpoint of Fonterra's forecast farmgate milk price, Cronin said "$6.80 seemed about right" especially with WMP "holding up a lot stronger than we expected it to".