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Dairy prices rise slightly at New Zealand GlobalDairyTrade auction

During last night’s GlobalDairyTrade auction, dairy prices remained widely stable. In all, prices were up 0.6 percent, after previous auction’s 3.5 percent decline. After a 7.7 percent decline last auction, prices of whole milk powder remained stable, falling slightly by 0.1 percent to USD 3,282/tonne.

AMF performed the best, rising 3.7 percent to USD 5,528, whereas SMP dropped 1.6 percent to USD 2,612. Buyer interest out of China appears to have rebounded in the last few auctions, after dropping slightly through December.

Prices are expected to moderate further in the coming months. The pace of the fall in global supply is expected to decelerate as farmers respond to increased prices on offer, noted ANZ in a research report. In New Zealand, the season’s milk collection is unlikely to contract as much as the 7 percent Fonterra is expecting.

Conditions in New Zealand have rebounded after a very wet spring that augurs well for production through the back half of the season. However, rapidly drying conditions in some parts of New Zealand adds risk to this, added ANZ.

“Today’s auction was broadly in line with our expectations and leaves us comfortable with our forecast of a $6.20 farm gate milk price this season”, stated ANZ.

At 05:00 GMT the FxWirePro's Hourly Strength Index of New Zealand Dollar was highly bullish at 100.176, while the FxWirePro's Hourly Strength Index of US Dollar was bearish at -96.5666. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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