5 May 2021

Dairy prices suffer another fall in global auction

11:46 am on 5 May 2021

Dairy prices have fallen overall in the global auction overnight, with a split between strong milk powder prices and a huge drop for butter.

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(File image). Photo: RNZ

The average price at the auction eased 0.7 percent to $US4162 a tonne, which followed a fractional fall at the previous auction two weeks ago.

However, some big gains at earlier auctions this year meant prices still remained close to seven-year highs.

The price of whole milk powder, which strongly influences the payouts for local farmers, rose 0.7 percent to $US4115 a tonne.

Jarden adviser Mike McIntyre said another near unchanged overall result would be "warmly welcomed by the rural community of New Zealand" as the end of the season drew close.

"We are hearing the first murmurings out of the local banks as to their expectations for the coming 2021/22 season with some being as bold as to suggest an $8 handle."

McIntyre said while current prices seemed to support that farm gate price of $8 per kilogram of milk solids (kgMS), he would be surprised if Fonterra's next price - due in three weeks - was as high.

The last Fonterra payout forecast in March was $7.60 per kgMS.

Westpac, which had forecasted that $8 per kgMS farm gate price, said the auction results showed "prices remain on the front foot heading into the new dairy season".

The bank said consistent prices cemented the bumper gains from early March.

NZX reports whole milk powder buying was dominated by the North Asia market, which took a significantly larger amount than this time last year. Africa, Europe, and the Middle East purchased more whole milk powder than at the last event two weeks ago.

Other products sold were mixed, with a massive 12.1 percent drop for butter, but a 2 percent rise for skim milk powder.

Cheese lost 4.5 percent to an average price of $US4274 a tonne.

That price slide for butter meant it lost on average $US701 a tonne and settled at a final price of $US5035 a tonne. The other player in the cream group, anhydrous milk fat, also fell in price by 4.2 percent to $US5730 a tonne.

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