Whole milk powder price leaps 18.9%
Prices surged in the GlobalDairyTrade auction overnight amid signs that the worldwide supply glut is easing.
Average dairy prices were up 12.7% to $US2371 per tonne (most farmers need prices need to hit about $US3000 a tonne to break even).
Whole milk dairy powder (that is, New Zealand's single largest export) jumped 18.9% to $US2695 a tonne.
It was the second big rise in a row.
On August 3, average prices were up 6.6% and whole milk powder up 9.9%.
The futures market had predicted another big jump but not on this scale.
"My official media statement today will be 'Yabba Dabba Do'," Federated Farmers chairman Andrew Hoggard tweeted earlier this morning.
However, he later qualified that "we need to see a trend, a couple more rises to see some stability."
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“It was a stunning result and it couldn't have come at a better time for our farmers,” AgriHQ dairy analyst Susan Kilsby said in a note. “I think it is now safe to say the market has turned a corner.”
Whole milk powder surged 18.9% to $US2695 a tonne.
The derivatives market had anticipated an increase of 11.5%, according to Ms Kilsby.
“This is an impressive result, given Fonterra volumes of whole milk powder are at their highest level for the season, at 21,500 tonnes,” said Ms Kilsby, adding that whole milk powder prices are now 45 percent above year-ago levels.
“Last year we saw a similar result with prices lifting at this time of the season only to fall away again in October,” Ms Kilsby noted. “This season I am more confident that prices will be able to hold up as global milk supply is now retracting rather than growing.”
At the GDT auction, butter milk powder jumped 18.1% to $US1983 a tonne, while butter increased 14.1% to $US3274 a tonne.
Cheddar climbed 8.9% to $US3157 a tonne, while anhydrous milk fat gained 8.4% to $US4148 a tonne.
Lactose rose 3.5% percent to $US763 a tonne, while skim milk powder added 3.0% to $US2028 a tonne, and rennet casein rose 2.5% to $US6326 a tonne.
The New Zealand dollar last traded at 72.69USc at about 12.52pm in New York, compared with 72.11USc at 5pm in Wellington the previous day.
There were 119 winning bidders out of 177 participating bidders at the 17-round auction. The number of qualified bidders rose to 606, up from 605 at the previous auction.
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