16 Sep 2014

Close eye on global dairy trade auction

3:36 pm on 16 September 2014

The dairy industry will be keeping a close watch on the global dairy trade auction overnight to see where prices are going to head after their sharp fall in recent weeks.

At the last auction a fortnight ago, the dairy trade price index dropped by another 6 percent to its lowest point in more than two years. Prices have nearly halved since February.

NZX Agrifax market analyst Nick Handley said today that dairy commodity prices have remained weak over the past week, but there are one or two positive signs.

"There will be a slight decline in milk powder volumes offered from the previous event, which may in a small way help boost prices a little.

"Over the past week, dairy commodity prices have held fairly low, although there have been some positive signs showing from the NZX dairy futures market.

"Outside New Zealand in the US, butter and cheese prices have remained very firm, but there has been a sharp downwards correction in prices for non-fat dry milk, which is the equivalent of skim-milk powder in New Zealand.

"In Europe, whole milk powder pricing has lifted ahead of Algeria's milk powder tender, which is held several times a year. These tenders have a significant impact on the market, with Algeria being the world's second largest importer of milk powder after China."

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