Dairy commodity prices bounce after consecutive falls

The result was better than what had been expected.
The result was better than what had been expected. Photo credit: Getty

Global dairy prices have lifted at the latest Global Dairy Trade (GDT) auction after four consecutive falls.

Prices rose 1.2 percent at the April 7 GDT event.

NZX Agri dairy analyst Amy Castleton said the result was better than what had been expected. 

"Market sentiment has still been relatively negative in terms of prices, and the NZX Dairy Derivatives market had been indicating falls across all four main commodities," said Castleton.

Whole milk powder (WMP) prices were up 2.1 percent overall with prices lifting across all contract periods. 

Castleton said the bounce in prices showed there is still some good demand for dairy commodities in the current environment. 

"As we are coming to the end of New Zealand's dairy season, product availability is limited. 

"The lift in prices shows demand is generally higher than the volume of product available," she said.

North Asia bought more product at this event than they did at the last event, as did South East Asia and Oceania. 

There was a fall in the volume bought by Africa and the Middle East - however the fall in the oil price will be having an effect on affordability of dairy product for these regions.

Butter prices bounced 4.5 percent, while unsalted butter to ship in June jumped 4 percent.

Anhydrous milkfat (AMF) was up 0.4 percent overall, while regular grade AMF to ship in June lifted 3 percent. 

"AMF prices did see a fall for product shipping in May, indicating there isn't an immediate need for product but there is demand further out."

Fonterra had added extra volume of AMF to the GDT platform ahead of the event. 

The price lift in spite of the extra volume showed there was a need for product above what was actually available, said Castleton. 

Nearly all of the AMF volume was sold.