16 Sep 2020

Dairy prices rise an average 3.6%

9:50 am on 16 September 2020

Dairy prices rose the first time in two months, increasing an average 3.6 percent to $US3092 a tonne.

Spoon with infant formula

The price of wholemilk powder, which strongly influences payouts for local farmers, increased 3.2 percent, Photo: 123rf

The rise in the average price at the overnight global dairy auction compared with a 1 percent fall at the last sale two weeks ago.

"The result indicates a firming of global demand as buyers who have been sitting on their hands looking for market direction step up their purchases," RaboResearch dairy analyst Thomas Bailey said.

The price of wholemilk powder, which strongly influences the payouts for local farmers, increased 3.2 percent to $US2985 a tonne.

The prices for other products sold were mixed, with gains for cheese and skim milk powder, but a fall in butter.

Demand from south Asia was strong, and there was a clear preference to buy New Zealand-sourced skim milk powder.

"Today's results should support broader increases in prices around the world, boosting profitability for dairy farmers, and eventually resulting in a bump in milk supplies," Bailey said.

Fonterra reports its annual earnings result on Friday, which is expected to see it return to profit after last year's massive loss on the back of asset writedowns.

The co-operative will also confirm the payout for the season just finished, which it has forecast to be between $7.10 to $7.20 a kilo of milk solids, and update the forecast for the current season, which it last estimated at $5.90-$6.90 per kilo of milk solids.