The Global Dairy Trade auction index in New Zealand declined for the first time since November. The index declined 1.2 percent from the last event at $3,417 per ton. It was a lightly traded session with declines reported in butter, whole milk powder and anhydrous milk fat. But it wasn’t all doom and gloom. Cheddar cheese shot up 15.2% to $2.20/lb. Skim milk powder (SMP) was up 0.5% to 1.15/lb. Butter, however, did slide back to $2.40/lb, a drop of 3.2%. Whole milk powder also declined 2.1% to $1.44/lb.
“Demand from China looks to have remained reasonably firm over the last month,” Westpac economists said in a research note. “Ongoing firm demand from China will be key in determining whether dairy prices are able to remain near these levels”.
Prices have been rising due to weak supply from New Zealand, combined with strong demand, particularly from Asia.
The Global Dairy Trade auction is operated by U.S.-listed CRA International Inc. GDT Events is owned by New Zealand’s Fonterra Co-operative Group Ltd, which controls nearly a third of the world dairy trade, but operates independently from the dairy giant.
A total of 15,510 tonnes was sold at the latest auction, up 0.9 percent from the previous sale, the auction platform said on its website.
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.
The currency was largely flat on Wednesday, trading just above $0.6500 and lingering near seven-month lows, largely on the back of global trade concerns and this month’s central bank rate cut.
A number of companies, including Dairy America and Murray Goulburn, use the platform to sell milk powder and other dairy products.
The auctions are held twice a month, with the next one scheduled for June 4.