Overall GDT prices fall 0.7%

Nathan Penny.
Nathan Penny.
Overall prices in Fonterra's Global Dairy Trade auction this week fell 0.7% to their lowest levels since October 2016.

ASB senior rural economist Nathan Penny said the ''modest decline'' fitted with price weaknesses normally seen at this time of year as New Zealand milk production neared its seasonal peak.

''New Zealand production will peak next month and the extra availability usually dampens prices through the spring,'' he said.

Overall, the prices eased 0.7% from the previous auction a fortnight ago. The average price was $US2980 ($NZ4523) a tonne, compared with $US3044 a tonne two weeks ago. There was 38,811 tonnes of product sold, up from 32,041 tonnes.

Whole milk powder fell 2.2% to $US2821 a tonne.

Last week, Fonterra revised its 2018-19 forecast farm-gate milk price from $7 to $6.75, citing stronger milk supply signals from the world's key dairy-producing regions.

Mr Penny said ASB was sticking with its 2018-19 forecast of $6.50, but noted there there were risks the price would ease further.

Westland Milk Products was predicting a payout range of $6.75 to $7.20 for its 2018-19 season.

Mr Penny expected New Zealand milk production to lift ''moderately'' from last year by 2%, but said dry weather overseas meant exports from some countries were likely to be scarcer in coming months.

''Meanwhile, global demand is mixed, but overall remains relatively positive,'' he said in a statement yesterday.

AgriHQ dairy analyst Amy Castleton said butter dropped 2.8% to $US4271 a tonne.

''Oceania butter prices are currently the lowest globally, so the market had been anticipating that they would find some support,'' Ms Castleton told BusinessDesk.

Lactose slipped 0.5% to $US917 a tonne.

Butter milk powder rose 0.1% to $US2474 a tonne, while anhydrous milk fat rose 0.2% to $US5316 a tonne. Skim milk powder rose 2.2% to $US2005 a tonne, rennet casein rose 3.7% to $US5326 a tonne and cheddar climbed 4.2% to $US3631 a tonne.

Earlier this week, Fonterra's Clandeboye site fired up its third new mozzarella cheese line, meaning it now produces enough to top more than half a billion pizzas a year.

It also became the southern hemisphere's largest producer of natural mozzarella. The cheese is made in hours, rather than the months that traditional mozzarella takes. - Additional reporting: BusinessDesk

simon.hartley@odt.co.nz

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