June 19, 2014

Global dairy prices have risen for the first time since February, with a 0.9% increase to US$3,800 per tonne in the average selling price in the fortnightly auction.

Benchmark whole milk powder rose by 2.4% and butter milk powder rose by 17%.

ASB Bank rural economist at ASB Bank Nathan Penny said, based on similar trends in the past, dairy prices should stabilise further over the coming auctions.

"After eight consecutive falls in the global dairy auction prices, the small rise indicates the first tentative steps towards those prices stabilising," he said. "…in general we expect prices to stabilise further over the next few auctions and then for them even to recover over the second half of the year."

Synlait managing director, John Penno said Chinese buyers had not been stockpiling and that their stocks were probably higher than average because they misjudged the strength of local production, which was up due to favourable weather this year.

Penno said dairy prices had been declining because China's milk production was up.