Dairy product prices fall for third straight GDT auction to seven-month low
Dairy product prices fell for the third straight time at the latest Global Dairy Trade auction as whole milk powder extended its drop and skim milk powder recovered.
The GDT price index fell 3.5% from the previous auction two weeks ago to $US3105, the lowest since April.
Some 35,072 tonnes of product was sold, down from 35,669 tonnes at the previous auction.
Whole milk powder fell 5.5% to $US2852 a tonne.
The auction comes just a week after Fonterra reiterated its forecast 2017/18 payout of $6.75 per kilogram of milk solids plus earnings per share in a range of 45-55c at its annual meeting.
Chairman John Wilson said farmers enjoyed a good season in 2016/17 "after two seasons of unusually low milk prices" although the projection exceeds some analysts’ forecasts.
"The fall in WMP prices will increase the pressure on milk price forecasts," AgriHQ analyst Amy Castleton says.
"The AgriHQ milk price forecast for the 2017-18 season calculated after the October 17 GDT event was $6.36kg/MS, 39c lower than Fonterra's $6.75kg/MS forecast.
“The AgriHQ forecast will be revised tomorrow but will likely decline further."
Ms Castleton says North Asian buyers bought less product overall at this auction and it is likely that "Chinese buyers have now fulfilled their needs to land milk powder while the lower tariff rate applies from January 1."
Butter fell 3.6% to $US5516 a tonne, matching the direction of November butter futures which had dropped yesterday.
Butter demand has soared this year, stoked by a surge in the popularity of natural products in first world markets like the US and Europe. The GDT Butter Price Index hit a record high on September 19.
At the latest GDT auction, rennet casein dropped 4% to $5465 a tonne while skim milk powder rose 1.2% to $US1818 a tonne. Cheddar fell 2.8% to $US4001 a tonne and anhydrous milk fat rose 0.5% to $US6894 a tonne.
Buttermilk powder rose 7.2% to $US1931 a tonne and no prices were available for lactose.
There were 133 winning bidders out of 165 participating at the 14-round auction. The number of qualified bidders rose to 554 from 544.