3 Apr 2024

Dairy prices rise for first time since February

8:03 am on 3 April 2024
FOR WATER TAX story - Generic cow

Photo: RNZ / Rebekah Parsons-King

Dairy prices have risen for the first time in more than a month, with key products appearing to find a price floor.

The average price rose 2.8 percent to US$3558 [NZ$6071] a tonne in the latest auction overnight, the first rise since late February, following a similar sized fall in the previous auction.

NZX dairy analyst Lewis Hoggard said prices were in line with expectations and the recent fall in prices appears to have been halted, on the back of demand for whole milk powder (WMP).

"It seems that WMP has found a near term price floor following two consecutive weak results in March. Demand from North Asia was the driver of the increase."

The whole milk powder price, which influences payouts for local farmers, rose 3.4 percent to US$3246 a tonne.

Skim milk powder also appeared to have found a floor, gaining 1.4 percent. Most other prices rose with solid gains for butter and cheddar.

Hoggard said there were some concerns in the market about the outbreak of the H5N1 bird flu among some US dairy herds.

"The disease has not been killing cows; however it has been impacting milk production in the infected and if it continues to spread there may be an impact on national US milk production, which has already been weak for the past few months."

The total volume of product sold at the auction was the lowest since May 2020, down nearly 5 percent on the previous auction, and down more than 21 percent on the same last year.

Dairy company forecasts for the current season, which ends soon, are for a payout around $7.80 a kilo of milk solids.

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