Global Dairy Trade auction prices fall again

35 minutes ago

Photo: 123RF

Prices slipped at the Global Dairy Trade auction again, as ample product availability and ongoing milk production growth keeps pricing under pressure.

The average price fell 2.8 percent overnight to US$3979 (NZ$6764) a tonne at the global dairy trade auction overnight. It comes after a 0.6 percent fall at the previous auction a fortnight ago.

The important whole milk powder price, which influences dairy farmer payouts in New Zealand, fell 3.1 percent to US$3589 (NZ$6101) a tonne. Skim milk powder also dropped 3.6 percent.

In a note, New Zealand Exchange head of dairy insights Cristina Alvarado said the price fall was not unexpected, with market sentiments ahead of the event "firmly negative".

"While the outcome confirmed the bearish sentiment that had developed ahead of the auction, the result also highlighted that demand remains present, helping prevent a deeper correction despite increasingly abundant global dairy supplies."

Alvarado said there was strong milk production across the major exporting regions - Northern Hemisphere production continued to expand seasonally while New Zealand volumes remained available - creating a situation where product availability was outpacing immediate buying requirements.

While butter prices fell 2.4 percent, she said it was one of the "strongest-performing dairy commodities relative to historical norms".

North Asia was the leading buyer of butter and maintained a 22 percent purchasing share across all commodities. Southeast Asia/Oceania remained the largest buying region, accounting for 41 percent of total product sold.

Meanwhile, the Middle East increased its participation to 14 percent of total purchases, while South and Central America lifted its share from 6 percent at the previous event to 9 percent, providing additional support across the platform.

Alvarado said overall the auction "reinforced the current market narrative".

"Global demand remains active, but ample product availability and ongoing milk production growth continue to keep pricing under pressure.

"While buyers are still engaging when values become attractive, the market currently lacks the demand momentum required to absorb growing supplies and drive a sustained recovery in prices."

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