January 23, 2014

Global dairy prices up 1.4% overnight

Led by surging prices for butter and cheese, dairy product prices rose at the latest GlobalDairyTrade (GDT) auction overnight.

On January 8, the GDT Price Index increased 1.4% from the last sale. 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% to US$4,657 per tonne, cheddar gained 10.4% to US$5,133 per tonne, and milk protein concentrate advanced 7.2% to US$9,657 a tonne, leading gains in the index.

Rennet casein rose 4.2% to US$12,390 per tonne, butter milk powder climbed 3% to US$5,244 per tonne, and anhydrous milk fat gained 2.2% 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 average winning price for whole milk powder, the biggest product by volume, increased 0.1% to US$4,943 per tonne, and skim milk powder slipped 0.5% to US$4,698 a tonne.