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.
Read more:
• Dairy prices poised to fall again
• Fonterra cuts dairy payout forecast
• Dairy an "area of risk": Reserve Bank