An increase in supply led to another drop in price. Photo/123RF.
An increase in supply led to another drop in price. Photo/123RF.
Dairy product prices declined at the Global Dairy Trade auction, led by a larger-than-expected drop in whole milk powder, after Fonterra said an increase in its May production lifted its expectations for the season's milk collections.
The GDT price index fell 5.0 per cent from the previous auction two weeksago. The average price was US$3,232 a tonne. Some 26,519 tonnes of product was sold, up from 21,634 tonnes two weeks ago.
Whole milk powder sank 7.3 per cent to US$2,905 a tonne.
Fonterra released its May Global Dairy Update yesterday, indicating its May production was up 6.6 per cent and that it expects to collect 1.3 per cent more milk in the 2018-19 season, AgriHQ dairy analyst Amy Castleton said in a note today.
"This appears to have given the market the jitters, especially for whole milk powder," Castleton said.
While there was 20 per cent more whole milk powder sold at this auction than at the previous event on June 19, "buyers were not willing to pay more for it," according to Castleton. "Offer volumes will continue to seasonally increase over the next few months."
At the latest GDT auction, skim milk powder shed 4.6 per cent to US$1,913 a tonne, while cheddar retreated 4.3 per cent to US$3,713 a tonne.
Butter slid 4.0 per cent to US$5,390 a tonne, while anhydrous milk fat fell 1.7 per cent to US$5,937 a tonne.
"Anhydrous milk fat has been undervalued relative to butter on a milkfat content basis since the end of February," said Castleton. "This still remains the case even though butter saw a greater fall than anhydrous milk fat at" this auction.
Bucking the trend, rennet casein climbed 3.6 per cent to US$5,089 a tonne, while butter milk powder rallied 6.4 per cent to US$2,480 a tonne.
For sweet whey powder and lactose, neither an index nor price was available.
The New Zealand dollar last traded at 67.54 US cents as of 2.42pm in New York, compared with 67.16 US cents at the previous close in Wellington.
There were 118 winning bidders out of 152 participating at the 13-round auction. The number of registered bidders rose to 524, up from 522 at the previous auction.
