Event 238 of the Global Dairy Trade took place on Tuesday with the overall index declining 3.8% from the last event to $3,208 per ton. Global dairy prices slipped for the third time in a row. The price drops, which were broad-based across most products, were likely due to ramped up supply, according to analysts.
Butter, cheddar and whole milk powder saw the largest decreases in prices while rennet casein reported the only increase, up 2.3 percent. A total of 24,239 tonnes was sold at the latest auction, an increase of 22 percent from the previous one, the auction platform said on its website.
Although forecasts of lower U.S. milk production could support prices over the coming months, analysts cautioned that signals pointing to slower demand posed a risk.
“Slowing economic conditions in some of our key trading partner economies, including China and some European countries, signal headwinds for prices,” said Satish Ranchhod, senior economist at Westpac Bank in New Zealand, the world’s largest dairy exporter.
The auction results can affect the New Zealand dollar as the dairy sector generates more than 7 percent of the nation’s gross domestic product. However, the Kiwi currency was largely flat at around $0.6527 on Wednesday morning.
GDT Events is owned by New Zealand’s Fonterra Co-operative Group Ltd, but operates independently from the dairy giant.