Global dairy prices rose for the fifth time in a row at a fortnightly auction held early on Wednesday as constrained global supply provided support.
The GDT Price Index climbed 1.7%, with an average selling price of $3,481 per tonne, having risen 3.7% in the previous sale.
“It is strength in the milk powders that have driven the latest increase,” said Robert Gibson, analyst at NZX. “This is likely due to Northern Hemisphere production being at a seasonally low point in the year, and milk supplies continuing to wane from Southern Hemisphere countries, with New Zealand starting to ease back on the previous year’s supplies too.”
Prices for whole milk powder, the most widely traded item at the auction, rose 2.2% to its highest level in almost three years, while skim milk powder prices jumped 3.3%.
A total of 37,968 tonnes was sold at the latest auction, falling 1.8% from the previous one, the auction platform said on its website.
The auction results can affect the New Zealand dollar as the dairy sector generates more than 7% of the nation’s gross domestic product.
The kiwi currency was up 0.5% on Wednesday morning, trading around a two-week high of $0.6430.
GDT Events is owned by New Zealand’s Fonterra Co-operative Group Ltd, but operates independently from the dairy giant.
The New Zealand milk co-operative, which is owned by about 10,500 farmers, controls nearly a third of the world dairy trade.
U.S.-listed CRA International Inc is the trading manager for the twice-monthly Global Dairy Trade auction.
The next auction is scheduled for Dec. 3.