Dairy product prices edge higher, butter continues its climb

There's strong consumer appetite for natural, full-fat products.

Dairy product prices rose at the Global Dairy Trade auction, gaining for the first time in three auctions, with butter outpacing the other commodities amid strong consumer appetite for natural, full-fat products.

The GDT price index rose 0.2 per cent from the previous auction two weeks ago to US$3,387. Some 26,688 tonnes of product was sold, down from 28,574 tonnes at the previous auction.

Whole milk powder advanced 0.3 per cent to US$3,114 a tonne.

"Whole milk powder prices are expected to stick close to current levels for most of the season," AgriHQ dairy analyst Susan Kilsby said in a note.

At the latest GDT auction, butter rose 3.4 per cent to US$6,004 a tonne.

"Butter outshone other commodities once again this auction," Kilsby noted. "Strong consumer demand for natural, full fat products such as butter is here to stay."

"This strong demand along with limited supply is keeping buyers of dairy commodities paying current high prices-though they aren't necessarily happy about paying so much for it," according to Kilsby.

"Fonterra is set to offer less butter on GDT this year due to strong demand from other sales channels," said Kilsby, adding that Fonterra's forecast for butter offer volumes over the next 12 months is 15 per cent behind what it offered last year.

Rennet casein gained 2.4 per cent to US$6,358 tonne, while cheddar rose 1.6 per cent to US$4,112 a tonne.

Meanwhile, skim milk powder dropped 3.2 per cent to US$2,024 a tonne, while lactose fell 1.8 per cent to US$825 a tonne, and anhydrous milk fat slipped 0.2 per cent to US$6,577 a tonne.

Butter milk powder was not offered at this event.

The New Zealand dollar last traded at 73.56 US cents at 2.19pm in New York, compared with 73.18 US cents at 5pm in Wellington the previous day.

There were 115 winning bidders out of 160 participating at the 17-round auction. The number of qualified bidders rose to 525, up from 523 at the previous auction.