19 Jul 2017

Butter fattens dairy prices as skim prices slim

7:52 am on 19 July 2017

Prices have risen slightly in the global dairy auction overnight.

The average price lifted slightly, up 0.2 percent overnight to $US3387 a tonne.

This follow two small drops at the previous auctions.

The price of whole milk powder, one of New Zealand's largest exports, was up 0.3 percent to $US3114 a tonne.

The total volume of product sold at the auction fell by 6.6 percent compared to the previous auction to 26,688 tonnes.

Butter had the largest increase in this auction, continuing an upward climb as prices rose 3.4 percent.

AgriHQ dairy analyst Susan Kilsby said butter outshone other commodities.

"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," she said.

Ms Kilsby said Fonterra is set to offer less butter on the Global Dairy Trade this year because of strong demand from other sales channels.

"Its forecast for butter offer volumes over the next 12 months is 15 percent behind what it offered last year," she said.

Skim milk powder prices fell another 3.2 percent and Ms Kilsby said the volume of skim milk powder in storage is putting pressure on this part of the market.

The European government's intervention scheme, which buys the product and stores it, may start to buy skim milk powder again soon, Ms Kilsby said.


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