Dairy prices slipped again at this morning's GlobalDairyTrade auction, the GDT price index falling by 1.3 per cent but with only slight falls recorded for whole milk and skim milk powder.
Wholemilk powder - the most actively traded group on the GDT platform - fell in price by just 0.1 per cent from the last sale to US$2327 a tonne, while skim milk powder prices eased by just 0.2 per cent to US$1978.
Mike McIntyre, head of derivatives at First NZ Capital, said the overall price decline - the seventh in a row - was disappointing given that offer volumes were at seasonal lows.
"The one consolation farmers can take is the recent weakness in the New Zealand dollar but they will be hoping that there is an increase in demand in the coming months as volumes on GDT ramp up very quickly from here," he said.
ASB Bank economists expect dairy prices to remain weak for two or three months because of higher New Zealand milk production.
The international dairy market is suffering from a supply/demand imbalance, with higher production coinciding with subdued demand, particularly from the world's biggest importer - China.
In New Zealand, milk production jumped by 9.2 per cent in April to 138.07 million kg of milksolids compared with April last year.
Last week, the Reserve Bank cited weakness in dairy prices as a reason for cutting its official cash rate by 25 basis points to 3.25 per cent.
At this morning's sale there were encouraging signs of strength to come from some products put up for sale on the GDT platform.
Anhydrous milk fat prices were up 8.9 per cent to US$2814, butter milk powder prices were up by 10 per cent to US$1975 and rennet casein was up by 4.3 per cent to US$6126.
