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Global dairy prices rise for sixth time in a row, pointing to ongoing recovery

 Global dairy prices rise for sixth time in a row, pointing to ongoing recovery

By Charlotte Greenfield

WELLINGTON (Reuters) - Global dairy prices rose for the sixth sale in a row at a fortnightly auction held early on Wednesday, cementing hopes of an ongoing recovery from a dip in 2018.

The GDT Price Index climbed 0.9 percent to an average selling price of $3,271 per tonne in the auction held in the early hours of the morning. The index had surged 6.7 pct at the previous sale.

Softer global supply and slower-than-expected production growth out of New Zealand, the world's biggest dairy exporter, was supporting prices, a reverse after falling for much of 2018.

"The conditions for the start of a new cycle have begun to emerge," said Nathan Penny, senior rural economist at ASB Bank. "Essentially those conditions boil down to supply growth increasingly lagging behind demand growth, with little prospect of catch-up in the short-term."

But the risks of a slow-down in the Chinese economy spilling over into lower household demand for dairy remained a vulnerability to ongoing price growth, he cautioned.

In total, 25,324 tonnes were sold at the latest auction, an increase of 8.6 percent from the previous one, the auction platform said on its website.

The auction results can affect the New Zealand dollar as the dairy sector generates more than 7 percent of the nation's gross domestic product.

The kiwi was trading up 0.5 percent at $0.6883 on Wednesday morning.

GDT Events is owned by New Zealand’s Fonterra Co-operative Group Ltd, but operates independently from the dairy giant. The New Zealand milk co-operative, which is owned by about 10,500 farmers, controls nearly a third of the world dairy trade.

U.S.-listed CRA International Inc is the trading manager for the twice-monthly Global Dairy Trade auction.

A number of companies, including Dairy America and Murray Goulburn, use the platform to sell milk powder and other dairy products.

The auctions are held twice a month; the next one is scheduled for March 5.

(Reporting by Charlotte Greenfield; Editing by Leslie Adler)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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Updated Date: Feb 20, 2019 05:05:20 IST