World dairy prices up 1.4% overnight
DAIRY product prices rose at the latest GlobalDairyTrade auction overnight led by surging prices for butter and cheese, two products which have posed problems for Fonterra as their prices lagged whole milk powder.
The GDT Price Index increased 1.4 per cent from the last sale on January 8. The average winning price was US$5,025 per tonne from US$4,953 a tonne at the last auction. Some 41,024 tonnes of product was sold, down from 46,418 two weeks ago, for about US$206.1 million.
Butter climbed 10.8 per cent to US$4,657 per tonne, cheddar gained 10.4 per cent to US$5,133 per tonne, and milk protein concentrate advanced 7.2 per cent to US$9,657 a tonne, leading gains in the index.
Rennet casein climbed 4.2 per cent to US$12,390 per tonne, butter milk powder increased 3 per cent to US$5,244 per tonne, and anhydrous milk fat gained 2.2 per cent to US$5,641 a tonne.
The gains in value-add products will be helpful to Fonterra, the world's biggest dairy exporter, which last year complained of a production mismatch when prices for its whole and skim milk powder surged ahead of its higher value products such as cheese and butter.
The latest auction results are encouraging with strong prices across the board and an apparent convergence in product prices which may be more favourable to Fonterra's current production capacity, the ASB said in a statement.
"Overall, the dairy markets remain very robust. This season's production continues to look favourable, and price signals encouraging. Accordingly, we continue to think the prospects for 2014 dairy sector income remain solid," the ASB note said.
The average winning price for whole milk powder, the biggest product by volume, increased 0.1 per cent to US$4,943 per tonne, and skim milk powder slipped 0.5 per cent to US$4,698 a tonne.
There were 134 winning bidders at the auction over 12 rounds. There were 193 participating bidders out of a total number of qualified bidders of 833.