World dairy prices lift
Global dairy prices rose 1.4 per cent at the latest auction, following a 3 per cent dip which ended a run of price increases.
The average price was US$2965 per tonne, with most commodities rising.
New Zealand’s main export, whole milk powder (WMP), rose 2.9 per cent, following a 3.8 per cent decline in the previous auction.
Lactose recovered with a 5.6 per cent gain.
There were 164 participating bidders, with 31,525 tonnes of product sold.
Fonterra’s decision to offer less for auction, after milk collection dropped in parts of New Zealand thanks to recent wet weather, helped drive prices up, said Westpac senior economist Anne Boniface.
Fonterra also expected to reduce the product for offer in coming auctions.
‘‘This announcement saw futures markets move to price in a sizable lift in WMP prices in [the] auction,’’ Boniface said.
‘‘While we have been sceptical that the recent lift in dairy prices would be entirely maintained in the coming months, we have also warned that NZ pasture conditions would be a particularly important determinant of NZ milk production this season. Indeed this is proving to be the case.
‘‘Consequently, on its own, [the] auction result adds some upside risk to our forecast of a $5 farm gate milk price this season.’’
‘‘For the third auction in a row, futures markets overestimated the lift in WMP prices.’’ Anne Boniface