Dairy slide bottoming out? Phew.

 Dairy product prices were relatively stable in the latest GlobalDairyTrade auction, with the whole milk powder price index advancing.

The GDT average winning price edged higher to US$2,649, up from US$2,646 three weeks ago, though the GDT price index slipped 0.3 percent. Some 45,499 tonnes of product was sold, down from 50,816 tonnes of product three weeks ago.

Dairy prices have come under greater scrutiny after Fonterra chief executive Theo Spierings said a recovery in whole milk powder prices is needed for the dairy exporter to meet its forecast payout to farmers. While there have been gains in the last auction, suggesting they might have found a bottom, the price for WMP needs to reach US$3,500 for Fonterra’s payment to stay on target.

The AgriHQ Seasonal Farmgate Milk Price for the 2014-15 season is unchanged at $4.75 per kilogram of milksolids following the auction. This compares to Fonterra’s current forecast for the season of $5.30/kgMS.

The AgriHQ Snapshot Farmgate Milk Price indicates that if the latest GlobalDairyTrade prices were achieved across the entire season this would equate to a milk price of $3.95/kgMS.

In the latest GDT auction, cheddar dropped 9.2 percent to US$2,728 a tonne, while butter milk powder declined 6.9 percent to US$2,426 a tonne, and butter dropped 4.1 percent to US2,505 a tonne. Rennet casein fell 2.2 percent to US$7,608 a tonne, anhydrous milk fat slid 1.6 percent to US$3,292 a tonne, and skim milk powder slipped 1.2 percent to US$2,457 a tonne.

Whole milk powder rose 1.6 percent to US$2,522 a tonne.

“Dairy commodity prices were slightly weaker overall at last night’s auction, but the whole milk powder price index did gain 1.6 percent which is important as this is the main manufacturing format for NZ dairy products,” AgriHQ dairy analyst Susan Kilsby said in a note.

“The rise in the whole milk powder price was assisted by a reduction in the volume of product on offer. Last week Fonterra revised its forecast offerings for the November 4 auction down to 27,450 tonnes. That represents an 11 percent reduction in volume compared with the previous auction and 9 percent less than the volume offered at the same auction in 2013,” Kilsby said.

The price for sweet whey powder was not published, indicating that product was sold at the starting price, and therefore GDT cannot publish the winning price.Lactose was not offered at the event.

The New Zealand dollar traded as high as 77.88 US cents at 10:55am in New York, and recently traded at 77.77 US cents. Earlier in the day, the kiwi had traded around 77.50 US cents.

There were 139 winning bidders out of 165 participating bidders at the 12-round auction. The number of qualified bidders rose to 672, up from 668 at the last auction.

(BusinessDesk)