Wednesday, October 17, 2018
 Global Dairy Prices Rise as Supply Tightens and Demand Picks Up  

The Global Dairy Price Index climbed 4.5% to an average selling price of $3,519 per ton at the latest auction held November 15th, with all dairy products registering increases in average prices amid supply decreases.


Prices have risen at seven of the eight auctions held since August with the gains largely driven by slowing global supply. There were also signs that demand was picking up, which suggested a recovery could be sustained longer-term.

“Once again there was strong buying interest out of China in last night’s auction, which helps give us some confidence that higher prices are not just a reflection of tighter supply but also, in part, reflect firmer demand,” said Anne Boniface, senior economist at Westpac in a research note.

Prices for dairy ingredients such as milk and butter have fallen sharply for more than two years, hit by a global oversupply and slowing demand from China, squeezing the finances of farmers and producers and pushing many towards consolidation in search of economies of scale.

The recovery could prompt New Zealand’s Fonterra to raise its milk payout for the season, analysts said.

Butter milk powder (BMP) prices increased 13.3% to US$2,623 a ton, while the cheddar index saw an increase of 11% to US$3,697 a ton. Skimmed milk powder (SMP) was another key driver of the increase this week, with prices up 9.8%.

Meanwhile, despite the futures market pointing to a 5% to 7% increase in whole milk powder (WMP) prices, they increased by 3.2% to US$3,423 a ton. 


While prices increased, supply decreased as 23,902 tons of product were sold which was down from 27,735 tons at the previous auction.


There were 106 winning bidders out of 164 participating at the 18-round auction. The number of qualified bidders held steady at 510, the same as at the previous auction. The auctions are held twice a month, with the next one scheduled for December 6th.

Source: GlobalDairyTrade


Posted on Thursday, November 17, 2016 (Archive on Thursday, November 24, 2016)
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