4 Jun 2014

Dollar edges down after dairy price fall

2:09 pm on 4 June 2014

The dollar has fallen slightly on Wednesday morning, following a further decline in dairy prices.

In the latest fortnightly global dairy auction, the average selling price fell 4.2 percent to $US3756 per tonne, the lowest it has been since February last year.

Prices are 26 percent lower than the record high $US5042 per tonne reached in early February.

The dollar fell nearly half a cent on the news, to 85.15 US cents, before recovering slightly to 84.34 by 10am.

ANZ Bank rural economist Con Williams says the drop in prices appears to be due to China already holding a lot of stock of whole milk powder following a buying spree earlier in the year.

Mr Williams expects prices to rise and stabilise between $US3800 and $US4000 per tonne in coming months.

Prices for whole milk powder - the largest amount of product sold - fell 8.5 percent to $US3594, buttermilk powder by 1.9 percent to $US3628, anhydrous milk fat by 5 percent to $US4058, and rennet casein by 10 percent to $US10,672.

That offset price gains for skim milk powder, which rose by 2 percent to $US3863, and cheddar by 8 percent to $US4236, while butter edged down slightly to $US3634.

Volumes sold rose by 10 percent to more than 37,000 tonnes.