Increased supply pushes dairy commodity prices down

Last updated 08:00 05/03/2014

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Prices dropped as supply rose in last night's dairy commodity auction.

The GlobalDairyTrade's trade-weighted price index overnight dropped 4 per cent compared with the last sale two weeks ago.

The average winning price dropped to US$4794 (NZ$5721) a tonne from US$5016 a tonne.

Maximum supply, the measure of how much product is for sale, rose from 34,998 tonnes to 42,037 tonnes, with a total of 41,086 tonnes sold.

Last night's drop was the second consecutive fall in dairy commodity prices, with five of the nine product categories down, while lactose did not trade.

Butter milk powder led the decliners, down 5.8 per cent and skim milk powder dropped 3.9 per cent. Whole milk powder, the biggest category by volume, dropped 5.7 per cent.

At the other end butter and rennet casein rose 3.9 per cent and 2.9 per cent respectively.

In last night's auction 189 bidders took part, with 139 winning bidders, and 796 qualified to bid.

American company Land O'Lakes' skim milk powder was included in the auction last night for the first time.

Land O'Lakes said it also planned to offer butter via the platform later in the year.

GlobalDairyTrade is owned by Fonterra, with Fonterra products representing 89 per cent of the product sold in the fortnightly auction.

United States, Australian, Indian, European and Scandinavian dairy companies also sell their products on the independent platform.

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