Dairy product prices recorded their biggest decline since June last year in the latest GlobalDairyTrade auction, paced by whole and skim milk powder, suggesting New Zealand commodity prices may ease from record highs.
The GDT Price Index fell 4 percent from the last sale two weeks ago. The average winning price was US$4,794 a tonne from US$5,016 a tonne at the last auction. Some 42,037 tonnes of product was sold, up from an eight-month low 34,568 tonnes in the previous sale.
Whole milk powder, the biggest product sold by volume, fell 5.7 percent to US$4,703 a tonne and skim milk powder declined 3.9 percent to US$4,658 a tonne. Butter milk powder fell 5.8 percent to US$4,792 a tonne.
The sale follows the release yesterday of the ANZ Commodity Price Index for February, which charted a new record high, with gains for cheese, butter and casein, and comes after government figures showed the New Zealand's terms of trade gained 2.3 percent in the fourth quarter, to the highest level since December 1973, driven by dairy products.
"Fonterra had raised the volumes being offered for all the main products, apart from anhydrous milkfat," Con Williams, agri economist at ANZ Bank New Zealand, said in a note. "The seasonal lift in supply of dairy products on GlobalDairyTrade proved difficult for the market to swallow, signalling a modest price correction could be on the cards.
"As long as supply continues to build, a moderation in prices is expected into 2014/15."
Milk protein concentrate fell 3.3 percent to US$8,524 a tonne and butter rose 3.9 percent to US$4,746 a tonne. Cheddar rose 0.7 percent to US$4,837 a tonne. Rennet casein climbed 2.9 percent to US$11,791 a tonne and anhydrous milk fat fell 3.5 percent to US$5,126 a tonne.
Lactose wasn't offered.
There were 139 winning bidders at the auction over 11 rounds. The total number of qualified bidders rose to 796 from 793.