2 Mar 2016

Dairy prices rise for first time in 2016

9:44 am on 2 March 2016

The global dairy price index has notched its first rise for 2016.

Organic milking teat cups.

Photo: RNZ / Alexander Robertson

At the latest GlobalDairyTrade (GDT) auction overnight, the average price climbed 1.4 percent to $US2253 a tonne - the first increase following four consecutive falls.

The key whole milk powder price rose 5.5 percent but, at $US1974, was still below $US2000 a tonne.

Farmers need at least $US3000 or more to break even.

Fonterra's forecast for the current dairy season sits at $4.15 per kilo of milk solids, with the co-operative expected to release its half-year results on 23 March.

AgriHQ dairy analyst Susan Kilsby said the rise in prices was great news for farmers but a sustained price recovery was expected to be some way off.

"Overall market sentiment still remains very bearish as global milk production is still expanded and stocks of dairy commodities are building."

China was a bright spot as it was expected to import more milk powder this year, she said.

"This [China] market is expected to import a little more milk powder this year as imported product is substantially cheaper than producing milk in China.

"But China alone is unlikely to soak up all the excess milk that will become available this year - hence a sustained price recovery is not expected to happen quickly," she said.

A graph shows the percentage change in the global dairy price index from September 2015 to March 2016.

A graph shows the percentage change in the global dairy price index from September 2015 to March 2016. Photo: GlobalDairyTrade

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