Global dairy prices slip slightly as attention turns to New Zealand's spring production
Prices slipped slightly this week's Global Dairy Trade (GDT) auction, moderating further from a rally earlier in the year, but analysts said the coming spring season would be key to further price moves.
The GDT Price Index dipped 0.4pc, with an average selling price of $3,339 per ton, in the auction held in the early hours of Wednesday morning.
A recent drop in price at four of the last five auctions has not yet caused alarm given it follows a strong three-month rally, which gave farmers confidence in an ongoing dairy price recovery after years of falls.
A total of 32,260 tonnes was sold at the latest auction, down 1.6pc on the previous sale. Prices for whole milk powder, a major New Zealand export, fell 0.6pc, as skim milk powder prices rose 0.3pc.
The outlook for prices was now largely being driven by weather in the New Zealand spring season over the next three months given the country is the world's largest dairy exporter.
"Early season NZ production is ... key," said ASB economists in a research note, adding that an expected production lift could be curbed if there were more rain than usual.
The auction results can affect the New Zealand dollar as the dairy sector generates more than 7pc of the nation's gross domestic product.
The currency fell around 0.7pc to a two-month low of $0.7230 in the wake of the auction results.