World dairy prices unaffected

IT was business as usual at this week’s GlobalDairyTrade auction, with no signs of dairy market panic from the United StatesChina trade skirmish.

Key whole milk powder prices posted a modest 1.6% gain while overall prices drifted 0.6% lower.

The WMP result — the highest since January — was stronger than expected. ASB had expected prices to fall about 1% while futures pricing had pointed to a similar fall, senior rural economist Nathan Penny said.

But he remained wary of the trade measures, saying if tensions escalated further and led to an ‘‘allout trade war’’, then all industries stood to lose, including dairy.

‘‘Essentially, a trade war would lead to lower incomes in both the US and China. In turn, lower incomes would lead to lower demand for products like dairy, and that would likely translate into lower global dairy prices,’’ he said in a note.

From here, prices were expected to remain at or around current levels until the end of the season.

While New Zealand production was improving, the recovery from weak production earlier in the season was progressing only gradually.

With global demand also firm, it was expected the global dairy market would remain largely balanced and for prices to track sideways as a result.

That view was contingent on the impact of the US and Chinese trade measures having little or no impact on global dairy markets.