WELLINGTON: International milk prices rose in the overnight Global Dairy Trade auction but the increase was less than expected.
The GDT Price Index, which covers a variety of products and contract periods, climbed 1.7 percent, with an average selling price of $2,975 per tonne, in the auction held on Tuesday.
Whole milk powder, which makes up the bulk of the auction, eased 0.2 percent to $2,782 percent while skim milk powder rose 3.0 percent. Dairy futures contracts had pointed to a stronger rise, in particular in whole milk powder.
"Steam has come out of the dairy market," said AgriHQ Dairy Analyst Amy Van Ossenbruggen. However, "a steadier increase - rather than the large jumps of the last few GDT events - will be more supportive to the market," she said.
Whole milk powder prices have risen more than 30 percent in the last four auctions.
Until recently, dairy was the backbone of New Zealand's economy, representing around 25 percent of exports. But dairy prices have dropped sharply from their record highs in 2013, due to China's economic slowdown and global oversupply.
Sliding prices have put farmers under pressure, with more than 85 percent estimated to be operating below breakeven levels.
A total of 35,086 tonnes was sold at the latest auction, falling 4.5 percent from the previous one.
The auctions are held twice a month, with the next one scheduled for October 4.
The auction platform was set up by Fonterra, the world's largest dairy exporter, and is operated by trading manager CRA International.
Participants include Fonterra, Amul, Arla Foods, Arla Foods Ingredients, Dairy America, Euroserum and Murray Goulburn. Products traded on the twice-monthly auction include whole milk powder, skim milk powder, butter, cheese, and anhydrous milk fat, among others.
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