Dairy product prices fell at the Global Dairy Trade auction as whole milk powder slid amid the prospect of increased supply.

The GDT price index slipped 0.3 per cent from the previous auction two weeks ago. The average price was US$2,885 ($4,381) a tonne, compared with US$2,901 a tonne two weeks ago. Some 41,945 tonnes of product was sold, easing from 41,981 tonnes two weeks ago.

Whole milk powder fell 0.9 per cent to US$2,729 a tonne.

"Whole milk powder prices had been expected to fall, as last week Fonterra both lifted its milk production forecast for the season and increased the volume of whole milk powder it intends to offer on the GDT platform over the next three months," AgriHQ dairy analyst Amy Castleton said in a note. "Whole milk powder was a little more resilient than anticipated, however."

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Regular grade whole milk powder to ship in December eased 0.7 per cent, which was less than the 0.9 per cent decline the market had anticipated, according to Castleton.

Indeed, "the average price for whole milk powder to ship in January actually rose 0.8 per cent, indicating there is some medium term need for product," Castleton noted.

At the latest GDT auction, cheddar slid 1.8 per cent to US$3,404 a tonne, while rennet casein declined 1.7 per cent to US$5,426 a tonne.

Skim milk powder was steady at US$1,977 a tonne.

Meanwhile, anhydrous milk fat rose 1 per cent to US$5,106 a tonne, lactose gained 1.5 per cent to US$926 a tonne, and butter climbed 2.4 per cent to US$4,114 a tonne.

"Demand for milk fats has been fairly solid, but the available supply seems have been outweighing demand in recent months," said Castleton.

"The GDT result will spur hopes that a corner has been turned in the milk-fat market—but it is too early to say whether prices will continue to rise."

Butter milk powder and sweet whey powder were not offered at this event.

The New Zealand dollar last traded at 65.95 US cents as of 1.09pm in New York, compared with 65.51 US cents at the previous close in Wellington.

There were 137 winning bidders out of 183 participating at the 15-round auction. The number of registered bidders was 511, up from 506 at the previous auction.