February 19, 2014

Since early November last year, dairy product prices have recorded their biggest drop in the latest GlobalDairyTrade (GDT) auction, with the volume sold falling to an eight-month low, with milk protein concentrate and butter leading the decline.

The GDT Price Index fell 1.2% from the last sale two weeks ago. The average winning price was US$5,016 a tonne from US$5,042 a tonne at the last auction.

Some 34,568 tonnes of product was sold, the lowest since June last year and down from 35,399 tonnes of product in the previous sale.

Milk protein concentrate fell 5.4% to US$8,824 a tonne and butter slid 3.8% from its highest level in at least a year, to US$4,586 a tonne. Whole milk powder, the biggest product sold by volume, fell 0.3% to US$4,999 a tonne.

Prices fell for the first time in three auctions and come after the monthly ANZ Commodity Price Index rose 1.2% to a record in January, with butter leading the gains. In December, Fonterra Cooperative Group, the world's biggest exporter of dairy products, kept its forecast farmgate milk price at a record high while slashing its dividend target, saying high prices for milk powder hadn't been matched by cheese and casein.

Cheddar dropped 1.7% to US$4,845 a tonne in the latest auction and rennet casein fell 3.5% to US$11,461 a tonne. Butter milk powder rose 3.1% to US$5,355 per tonne and anhydrous milk fat fell 4.5% to US$5,314 a tonne. Skim milk powder slipped 0.1% to US$4,780 a tonne.