Dairy product prices fall for third straight GDT auction

Dairy product prices fall for third straight GDT auction to 7-month low

By Jonathan Underhill

Nov. 8 (BusinessDesk) - Dairy product prices fell for the third straight time at the latest Global Dairy Trade auction as whole milk powder extended its decline and skim milk powder recovered.

The GDT price index fell 3.5 percent from the previous auction two weeks ago to US$3,105, the lowest since April. Some 35,072 tonnes of product was sold, down from 35,669 tonnes at the previous auction.

Whole milk powder fell 5.5 percent to US$2,852 a tonne.

The auction comes just a week after Fonterra Cooperative Group reiterated its forecast 2017/18 payout of $6.75 per kilogram of milk solids plus earnings per share in a range of 45-to-55 cents at its annual meeting. Chair John Wilson said farmers enjoyed a good season in 2016/17 "after two seasons of unusually low milk prices" although the projection exceeds some analyst forecasts.

"The fall in WMP prices will increase the pressure on milk price forecasts," said Amy Castleton, AgriHQ analyst. "The AgriHQ milk price forecast for the 2017-18 season calculated after the October 17 GDT event was $6.36/kg of milksolids (MS), 39 cents lower than Fonterra’s $6.75/kg MS forecast. The AgriHQ forecast will be revised tomorrow, but will likely decline further.”

She said North Asian buyers bought less product overall at this auction and it is likely that "Chinese buyers have now fulfilled their needs to land milk powder whilst the lower tariff rate applies from 1 January."

Butter fell 3.6 percent to US$5,516 a tonne, matching the direction of November butter futures which had declined yesterday.

Butter demand has soared this year, stoked by a surge in the popularity of natural products in first world markets like the US and Europe. The GDT Butter Price Index hit a record high on Sept. 19.

At the latest GDT auction, rennet casein dropped 4 percent to $5,465 a tonne while skim milk powder rose 1.2 percent to US$1,818 a tonne. Cheddar fell 2.8 percent to US$4,001 a tonne and anhydrous milk fat rose 0.5 percent to US$6,894 a tonne.

Butter milk powder rose 7.2 percent to US$1,931 a tonne and no prices were available for lactose.

There were 133 winning bidders out of 165 participating at the 14-round auction. The number of qualified bidders rose to 554 from 544.

(BusinessDesk)

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