Global Dairy Trade auction bucks expectations to soften overnight

After four large increases in a row, the Global Dairy Trade auction has gone against predictions to record a fall overnight, following a record high earlier this month.

Prices in the latest auction settled on a 0.9 per cent drop across the board; however this is still the second highest index recorded in the past decade.

Whole milk powder (WMP) - which has the biggest influence on Fonterra's farmgate milk price - slipped 2.1 per cent to an average US$4596/MT, following a 5.7 per cent increase at the previous auction.

Meanwhile skim milk powder - Fonterra's second biggest reference product - went in the other direction to lift 1.6 per cent to an average US$4545/MT - a mere US$51 behind WMP.

Butter softened slightly - down 1.8 per cent to an average US$6958/MT, but still US$2000 above where it was sitting six months ago.

Lactose, followed suit with a 0.6 per cent dip to an average US$1618/MT.

Meanwhile cheddar lifted slightly - up 0.3 per cent to an average US$6412/MT, after a 10.9 per cent surge last time. Again this is more than US$2000 up on six months ago.

Anhydrous milk fat also lifted slightly, with a 0.4 per cent increase to an average US$7111/MT.

Sweet whey powder was yet again not available at this event, and butter milk powder was not offered.

The volume of product traded was slightly down on the previous event, at 23,348 MT sold to 109 successful bidders.

Fonterra last month lifted its 2021/22 forecast farmgate milk price range to NZ$9.30 - $9.90 per kgMS, up from NZ$8.90 - $9.50 per kgMS.

This increases the midpoint of the range, which farmers are paid off, by 40 cents to $9.60 per kg, which would be the highest ever paid.

The dairy giant is due to release its interim annual results tomorrow.