New Zealand bonds end higher after global dairy prices slump at latest GDT auction

The New Zealand bonds ended higher Wednesday after global dairy prices slumped at the latest GlobalDairyTrade price auction, held late yesterday.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.99 percent, the yield on 7-year note also slipped 1 basis point to 2.83 percent and the yield on short-term 2-year ended 1/2 basis point lower at 2.10 percent.

The GDT fell 2.4 percent at this week’s auction in New Zealand – the biggest decline in the benchmark dairy index since early March. The GDT was dragged lower by a near 3 percent decline in whole milk powder (WMP) to just over NZD3,000/t. WMP is the most important commodity traded on the GDT accounting for over 50% of sales.

Skimmed milk powder (SMP), which is the second heaviest traded commodity on the GDT, saw prices weaken by 1.4 percent to less than NZD1,900/t. Butter prices were down 4 percent to less than NZD5,850/t, while anhydrous milk fat declined by more than 3 percent to NZD6,500/t. The price of buttermilk powder also tumbled more than 10 percent.

Meanwhile, the NZX 50 index closed 0.21 percent higher at 7,949.69, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -133.08 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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