Global Dairy Trade prices fall as New Zealand production shows signs of recovery
Global dairy prices dropped for a fourth consecutive time at a fortnightly auction on Wednesday as production in New Zealand showed signs of a potential turnaround after weak levels earlier in the season.
The world's largest dairy exporter curbed its supply late last year due to unusually dry weather.
Leading company Fonterra Co-operative Group Ltd reported on Tuesday a 2pc drop in New Zealand output volume in February, compared with a 5pc fall in January.
The Global Dairy Trade Price Index dipped 0.6 percent, with an average selling price of $3,477 per tonne, in the auction held at midnight, New Zealand time. The index fell 1.2pc at the previous sale.
A total of 17,222 tonnes was sold at the latest auction, falling 7.6pc from the previous one. The auctions are held twice a month, with the next scheduled for April 17.
"While (New Zealand) production is improving, the recovery from weak production earlier in the season is progressing only gradually," Nathan Penny, senior rural economist at ASB, said in a note, adding he expected steady prices for the rest of the season.
The New Zealand dollar edged higher to $0.7256, as some in the market expected a deeper drop in dairy prices. The dairy sector generates more than 7pc of New Zealand's gross domestic product.
The New Zealand milk co-operative, which is owned by about c10,500 farmers, controls nearly a third of the world dairy trade.