New Zealand dairy prices ease slightly at latest dairy auction, in line with market consensus

Dairy prices in New Zealand slightly eased during the month of November, widely in line with what markets had initially anticipated, at the latest GlobalDairyTrade price auction held Tuesday.

Dairy prices were broadly stable in last night’s GlobalDairyTrade auction, the final action of the year. In aggregate prices eased 0.5 percent including a 0.8 percent fall in whole milk powder prices to USD3,568/tonne and a 2.3 percent fall in AMF prices (to USD 5,367). Skim milk powder prices were unchanged at USD 2,621/tonne.

After strengthening over the last couple of months, buying interest out of China appeared to be more subdued in last night’s auction. In contrast, there was a lift in interest from African buyers and those in South East Asia.

We expect to see further moderation in prices in the New Year. The pace of decline in global milk production is likely to slow in response to the higher prices on offer.  And locally, domestic conditions have improved noticeably after a very wet spring in some regions.

The latest auction result was broadly in line with expectations and leaves us comfortable with our forecast of USD6.20 farm gate milk price this season.

Meanwhile, NZD/USD traded at 0.6925, up 0.13 percent, while at 6:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at 102.56 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex