20 Apr 2016

Dairy prices up in latest auction

7:56 am on 20 April 2016

Global dairy prices have climbed modestly in the latest auction, rising 3.8 percent to an average $US2263 a tonne.

It marks the second consecutive rise in the index after a number of falls in recent months.

Friesian cow.

The latest rise in the Global Dairy Trade auction was the second consecutive increase after a falls in recent months. Photo: RNZ / Alexander Robertson

The key wholemilk powder price had a strong session, gaining 7.5 percent to $US2156 a tonne.

That price helps determine the payout to dairy farmers and is at its highest level since January, but remains below a level of about $US3000 that some farmers need to break even.

All other commodities - except cheddar - made price gains.

Julia Jones, farm enterprise specialist at KPMG, told Morning Report the price increase was cause for cautious optimism.

"There's so much supply out there at the moment, so really we needed to see demand increase, obviously that's what happened."

She said increased demand from Asia would have pushed up prices but this was not a sign of boom times ahead.

"We need to be cautious in the farming sector around price and cost structures on our farms. This isn't the beginning of a big boom - we just need to be cautious."