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Tuesday 11 December 2018

Seven month slump of Global Dairy Trade continues as price index falls 3.5pc

  • SMP index down 1.6pc
  • WMP index down 1.8pc
A cow in front of Fonterra Kauri plant
A cow in front of Fonterra Kauri plant
Margaret Donnelly

Margaret Donnelly

The most recent Global Dairy Trade auction today has seen prices continue their downward slump, with the price index down 3.5pc.

Prices have fallen at almost every auction since May with this auction's prices down 3.5pc on the last with an average selling price of $2,727/t.

Some of today's key results include SMP being down 1.6pc, with an average price US$1,965/MT. The butter index was down 9.6pc, average price US$3,637/MT, while the cheddar index was up 0.2pc.

WMP index down 1.8pc, average price US$2,599/MT

At the last auction the GDT Price Index dipped 2pc, with an average selling price of $2,851 a tonne.

Prices for whole milk powder (WMP), the most heavily traded item, fell 2.9pc to its lowest since August 2016 and are expected to fall further on strong supply from New Zealand, the world’s largest dairy exporter.

“The expectations of continued milk supply growth from New Zealand will put ongoing pressure on WMP prices,” AgriHQ dairy analyst Amy Castleton said in a research note.

Butter prices also fell 1.7pc, though skim milk powder eked out a 1.2pc gain.

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The auction results can affect the New Zealand dollar as the dairy sector generates more than 7pc of the nation’s gross domestic product.

GDT Events, which runs the auction, is owned by New Zealand’s Fonterra Co-operative Group but operates independently from the dairy giant.

The New Zealand milk co-operative, which is owned by about 10,500 farmers, controls nearly a third of world dairy trade.

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