Drop for dairy but whole milk powder up

Dairy prices fell by 0.6 per cent at the latest Global Dairy Trade (GDT) auction to reach an average of US$3477 (NZ$4790) per tonne.

Futures markets had indicated average prices across all products would remain flat. This is the fourth consecutive decrease to the GDT index, following a bright start to the year with three increases in January and early February.

However the price of New Zealand’s key product, whole milk powder (WMP) rose 1.6 per cent.

Analysts are closely watching the auction to gauge the effect the trade spat between the United States and China might have on the New Zealand dollar.

Meanwhile Fonterra has reported a 4 per cent drop in milk collection in February, and a 2 per cent fall from the season’s start in June to the end of February.

By contrast Fonterra Australia collected 30 per cent more in February compared with the same month last year.

With only a few more weeks in the season, Fonterra expects total New Zealand production will come in at 3 per cent less than last year.

Federated Farmers dairy chairman Chris Lewis said farmers in some regions had been ‘‘doing it tough’’. He had visited Taranaki and Edgecumbe recently, the former hit by rain and drought, the latter by floods.

‘‘But at least the milk price has been relatively rock steady over the last year.’’

There was a ‘‘little bit of optimism’’ around, as reflected in last week’s Rabobank confidence survey, although problems such as Mycoplasma bovis had taken the gloss off.