Dairy prices lift at global auction

After seven consecutive falls, prices have increased at the latest global dairy trade auction.

Prices rose by 2.2 per cent to US$2819 a tonne at the auction last week, the first increase since August.

Butter milk powder was the standout performer, rising 16.9 per cent on the previous auction. New Zealand’s key export, whole milk powder (WMP), was up a more modest 2.5 per cent to US$2667, while skim milk powder (SMP) rose 0.3 per cent. Butter prices increased 2.7 per cent, anhydrous milkfat (AMF) was up 3.9 per cent, and casein rose 2 per cent.

Only cheddar continued the downward trend, falling 2.2 per cent to US$3184.

While ASB senior rural economist Nathan Penny said the result was a positive, currency movements were likely to explain most of the price gain. ‘‘The rise is similar to falls in the US currency over the past fortnight. In particular, the Chinese yuan has lifted making the USD-priced products cheaper for Chinese buyers,’’ he said.

As well as that, Penny said already-strong New Zealand dairy production could still strengthen further. ‘‘Recent favourable weather and growing conditions are likely to translate strong or even stronger production numbers over summer. And remember that October production was already an alltime high." On that basis, dairy prices on the whole were expected to remain soft over the next few months.