Dairy prices up at overnight auction
A rise in dairy commodity prices is being put down to a range of factors affecting both demand and supply.
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A rise in dairy commodity prices is being put down to a range of factors affecting both demand and supply.
At Fonterra's latest online auction on Tuesday night the globalDairytrade trade weighted index rose 7.2 percent and the average winning price rose to $US4246 ($NZ5438) per tonne from $US3960 a fortnight ago.
For anhydrous milk fat, the trade weighted price was up 9.2 percent to $US6486, skim milk powder gained 8.5 percent to $US3913, and whole milk powder lifted 5.7 percent to $US3995.
While big percentage changes are not unusual in the fortnightly actions economists note that the rise in the latest auction is not a one-off as prices have risen in the last five auctions.
The rise in the auction prices comes after the ANZ commodity price index rose to yet another new high, lifting 3.8 percent in January, with the New Zealand dollar index up 2.3 percent.
Skim milk powder had the largest rise last month, lifting 14 percent from December, ANZ said yesterday.
BNZ economist Doug Steel said there were many of factors behind the strength in dairy commodity prices.
High grain prices were driving up costs for United States dairy farmers, suggesting milk flow in the large US market would either struggle to grow or contract.
In New Zealand, the risk of drought in October, November and December had caused concerns about supply but rain in January helped ease this supply concern.
The New Zealand dairy season is starting to wind down and much of the production has already been sold so the focus is turning to prices for next season.
Mr Steel said that since the middle of November dairy commodity prices have risen more than 20 percent.
"It is more than just a blip. There are some pretty serious increases in prices."
However, he said the forecast payout for next season could be lower than last season due to the impact of the high New Zealand dollar even though Fonterra does have a hedging strategy for the currency.
NZPA
Thu, 03 Feb 2011
Thu, 03 Feb 2011
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Dairy prices up at overnight auction
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