Dairy product prices slide to lowest in almost six years

Dairy product prices slide to lowest in almost six years

June 3 (BusinessDesk) - Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in nearly six years, amid concern about the end of European milk quotas, Russia's trading embargo and sluggish Chinese demand.

The GDT average winning prices slid 4.3 percent to to US$2,412, down from US$2,472 at the previous auction two weeks ago. It was the lowest level since August 2009. Some 27,711 tonnes of product was sold, up from 26,535 tonnes of product two weeks ago.

“The fall in GDT prices was not expected. Ahead of the auction the NZX Dairy Futures market had anticipated that milk powder prices would rise,” AgriHQ dairy analyst Susan Kilsby said in a note. “However it appears buyers did not share that positive sentiment.”

The AgriHQ Seasonal Farmgate Milk Price for the 2015-16 season increased 3 cents to $5.63 per kilogram milksolids following the latest GDT auction. The AgriHQ Seasonal Farmgate Milk Price for the 2014-15 season has been revised up 2 cents to $4.52/kgMS. This increase was solely due to the weaker New Zealand dollar, Kilsby noted.

The New Zealand dollar is trading near the lowest level against the greenback in almost five years, amid expectations that the US Federal Reserve will lift interest rates this year.

Butter slid 10 percent to US$2,619 a tonne, while anhydrous milk fat dropped 7.4 percent to US$3,112 a tonne. Butter milk powder fell 7.0 percent to US$1,795 a tonne, while lactose declined 6.9 percent to US$540 a tonne.

Rennet casein shed 4.4 percent to US$5,789 a tonne, whole milk powder fell 3.1 percent to US$2,309 a tonne, while skim milk powder slipped 1.3 percent to US$1,982 a tonne,

Cheddar sold at US$3,055 a tonne, up from US$2,745 a tonne at the previous auction two weeks ago.

Sweet whey powder was not offered at the latest event.

“It was surprising to see such weak results for the milkfat products, because in the US and European markets there is steady support for butter,” Kilsby said. “New Zealand butter and AMF [anhydrous milk fat] is currently the world’s cheapest source of milkfat.”

The New Zealand dollar last traded 1.3 percent higher at 71.86 US cents at about 1:32pm in New York, compared with 70.93 US cents at 5pm in Wellington the previous day.

There were 115 winning bidders out of 148 participating bidders at the 12-round auction. The number of qualified bidders fell to 642, down from 687 at the last auction.

(BusinessDesk)

© Scoop Media