18 Aug 2011

Global dairy prices down

6:35 am on 18 August 2011

Global dairy prices fell slightly at Fonterra's online auction on Wednesday.

The Global Dairy Trade-Weighted Index fell 0.9% to an average selling price of $US3660 per metric tonne.

Prices have fallen at the past five auctions and the latest result is the lowest since December's auction.

Prices for whole and skim milk powder both fell, while cheddar cheese and buttermilk rose.

Prices have fallen at the past five auctions and the latest result is the lowest since December's auction.

But BNZ economist Doug Steel says even though the result is slightly down, it's a very solid result given the extreme financial market gyrations over the last fortnight or so.

He says the fact prices held up is encouraging for dairy and it also mirrors other commodity markets like lamb and beef where prices are also holding up well.

Mr Steel says the auction result is encouraging for the forecast payout to dairy farmers.

He says while the auction prices eased a fraction, if it is converted to NZ dollars given that the kiwi has fallen in the last fortnight, prices in New Zealand dollar terms actually rose by about 3%.