Dairy prices continued to improve at this morning's GlobalDairyTrade auction, the GDT price index gaining 1 per cent since the last sale a fortnight ago. It was the third consecutive rise in prices since the last sale of 2014.
Wholemilk powder - a key product for determining Fonterra's farmgate milk price - rose by 3.8 per cent since the last sale to US$2402 a tonne - but still well short of the US$3500 required for the co-operative's current forecast of $4.70 a kg to materialise.
ANZ Bank, in a forecast issued on Tuesday, expects the milk price to drop to $4.35 this season.
At the auction, rennet casein prices gained 3.3 per cent, butter firmed 0.1 per cent and skim milk powder prices improved by 1.0 per cent.
Those price gains were partially offset by falls for anhydrous milk fat, down 5 per cent, butter milk powder, down 6.4 per cent, cheddar down 4.3 per cent and sweet whey powder, down 4.1 per cent.
The AgriHQ Snapshot Farmgate Milk Price indicated that if the latest GDT prices were achieved across the entire season this would equate to a milk price of $4.35/kgMS, a 20c increase from the previous auction.
AgriHQ analyst Ivan Luketina said that although milk production in New Zealand waS well past its seasonal peak, milk flows were still high "so it's hard to see prices rising quickly in this market environment".
"That may yet come, however, if the current dry weather pattern persists in key dairy producing regions of New Zealand," he said.
The volume of whole milk powder offered by Fonterra was lowered from what had previously been forecast when revisions were made last week - 950 tonnes less on offer than previously forecast, and 3250 tonnes less than the last auction on January 6. Luketina said the lower supply may have had helped prices firm.
The average winning price across the auction was US$2758 a tonne.
By Jamie Gray, NZME. News Service business reporter
