Prices of dairy products fell in Fonterra's latest GlobalDairyTrade auction, the first decline in four sales, led by whole milk powder and cheddar.

The GDT-TWI Price Index dropped 2 per cent compared to the last sale two weeks ago. The average winning price fell to US$3,290 a metric tonne from US$3,348 a tonne in the last auction. Whole milk powder, the biggest product by volume, fell 3.5 per cent to US$3,170 a tonne and cheddar dropped 2.4 per cent to US$3,372 a tonne.

The sale is the first since the debut of units in the Fonterra Shareholders' Fund on the NZX, which have jumped about 23 per cent to $6.75 since listing last Friday, having sold in an initial public offering at $5.50. Today's sales gives unitholders an update on global pricing of Fonterra's products and may be reflected in the units when they resume trading today on the NZX and ASX.

The total volume sold rose to 52,596 tonnes from 48,335 tonnes two weeks ago.


Westpac Bank economist Nathan Penny described dairy prices as "taking a breather" in last night's auction.

The fall is the first since the October 2 auction, and overall, dairy prices had risen by 27 per cent since May.

Penny said the effects of the northern drought continued to linger. "Coupled with improving Asian growth, particularly in China, we expect this will support dairy prices over the remainder of 2012 and into 2013."

Anhydrous milk fat rose 3.7 per cent to US$3,197 a tonne. Only one contract date traded for butter milk powder, due Feb. 13, at a price of US$3.615, unchanged from the previous sale. Lactose wasn't offered for sale.

See more details of the auction here.

Milk protein concentrate fell 1.2 per cent to US$5,958 a tonne and rennet casein rose 0.3 per cent to US$7,926 a tonne. Skim milk powder fell 1 per cent to US$3,362 a tonne.

There were 141 winning bidders over 12 rounds. There were 178 participating bidders out of a total number of qualified bidders of 729.