Dairy prices rise at auction
Dairy prices held their recent gains as supply dropped at last night's global commodity auction.
The GlobalDairyTrade's trade-weighted price index rose 1.4 per cent overnight compared with the last sale two weeks ago. The average winning price was up to US$5025 ($6048) a tonne from US$4943 ($5964) a tonne.
Maximum supply, the measure of how much product is for sale, dropped from 46,956 tonnes to 41,338 tonnes, with a total of 41,024 tonnes sold.
The rise followed a slight drop in the dairy commodity price index at the last auction.
Westpac market strategist Imre Speizer said the rise had not "significantly extended" the recent gains in dairy commodity prices, but prices remained elevated.
In the latest auction seven of the nine product categories rose, one was not traded.
Butter led the gainers up 10.8 per cent, followed closely by cheddar up 10.4 per cent. Whole milk powder, the biggest category by volume, rose a marginal 0.1 per cent, while skim milk powder, the only decliner, was down 0.5 per cent.
Speizer said skim milk powder and whole milk powder made up the bulk of New Zealand's dairy commodity exports and these two categories had not experienced big movements in last night's auction.
While the positive dairy auction result was "modestly bullish" for the New Zealand dollar, the currency market did not markedly react to minor shifts in the commodity price index, he said.
The currency market became used to the 20 per cent movements in the price index seen a couple of years ago, and small price movements, like last night's, were largely ignored by the foreign exchange market.
In last night's auction 193 bidders took part, with 134 winning bidders, and 833 qualified to bid. American company Land O'Lakes would begin offering skim milk powder on the online auction from March 4.
Land O'Lakes said it also planned to offer butter via the platform later in 2014.
GlobalDairyTrade is owned by Fonterra, with Fonterra products representing 89 per cent of the product sold in the fortnightly auction.
US, Australian, Indian, European and Scandinavian dairy companies also sell their products on the independent platform.