Reduced volume lifts dairy price

Dairy prices are up 2.2 per cent following the GlobalDairyTrade (GDT) auction overnight on Tuesday, to reach an average price per tonne of US$3124.

The rise follows last week’s prediction by Fonterra that its farmers would produce 4 per cent less milk this season than last and it would be taking ‘‘volumes’’ of product off the GDT platform.

A proportion of the products usually sold on GDT would from now on be sold through its direct channels instead of at auction.

The price of whole milk powder lifted 4.2 per cent to US$2886, with

13,255 tonnes on offer compared with the last auction two weeks ago, a 19 per cent drop.

The most dramatic change in price saw butter milk powder take a sharp decrease by 7.3 per cent, having not been on offer at the previous auction.

Butter held firm with a slight gain of 0.6 per cent to US$4501, while the index for anhydrous milkfat fell 0.2 per cent.

Cheddar was down 2.1 per cent to US$3317 a tonne, but skim milk powder was up a surprising 1.6 per cent, with the Fonterra product traded at US$100 per tonne above that of other powder.

Fonterra revised its prediction for milk production twice in December as dry conditions started to bite. It now projects total New Zealand milk collection of

1480 million kilograms of milksolids for the season, compared with its earlier figure of 1525 million kg/MS.

Prior to this week’s results, overall prices had fallen at five of the last six auctions.

ASB said it was sticking to its forecast price of $6.50 per kg/MS. The bank said soil remained considerably drier than normal in many parts of the country.

There were 25,400 tonnes of milk products sold at auction.