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As New Zealand dairy prices rose in the latest GDT auction, Rabobank is keeping an eye on Europe said Michael Harvey.

Rabobank's senior commodity analyst, told The Country's Jamie Mackay that although the auction result was "a lot stronger" than expected, there are some downside risks facing world trade.

The GDT price index rallied 6.7 per cent and whole milk powder jumped 8.4 per cent.

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"Outside of the New Zealand season this year, most production regions have registered negative growth so that's really driving a tightening of the global market."

"The fundamentals are very strong and they will continue to remain fairly firm over the next six to nine months - but there's risk to that as well."

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One major risk facing world trade is slowing economies in major markets such as the US, China and parts of the Euro-zone said Harvey.

"That whole macro slow down is certainly a key risk because that can feed into slowing consumption of food and dairy."

Other risks include a hard Brexit, and the trade war between the US and China which could have commercial implications for the dairy industry.

However the "biggest watch," at the moment, is the European spring peak, said Harvey.

"We're all watching how strong that seasonal peak is, what they do with that milk flow and how will that impact the global market."

"There are always risks, they're probably a little bit heightened at the moment given the global macro settings, but certainly the key watch from a dairy perspective is Europe."