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 International milk prices were unchanged while volumes fell on Tuesday in the second Global Dairy Trade (GDT) auction of the month.

The GDT Price Index remained flat, with an average selling price of $3,479 per tonne. The index fell 0.9% at the previous auction held on June 6, with an average selling price of $3,399, GDT Events said.

A total of 20,372 metric tonnes of dairy products was sold at the latest auction, down about 11.9% from the previous sale, the auction platform said.

Key results remains as follows :

Key Results

AMF index up 0.5%, average price US$4,758/MT
Butter index up 5.5%, average price US$5,379/MT
Ched index down 3.3%, average price US$4,533/MT
SMP index down 2.3%, average price US$2,667/MT
WMP index unchanged, average price US$3,172/MT

The results could affect the New Zealand dollar as the dairy sector generates more than 7% of the nation’s gross domestic product.

HighGround Dairy global dairy consultant Stuart Davison said the market was expecting another slide in whole milk powder on the GDT after Fonterra shuffled its offer volumes.

Davison said he didn’t think the lower volume at the upcoming auction would support prices.

“Buyers are well aware that there will be greater volumes on offer in less than two months on the GDT platform,” he said.

The GDT index has dropped 25% over the past 12 months, while the average price for whole milk powder has slid 23%.

Demand for dairy products has softened as China’s economy hasn’t rebounded as fast as expected after its emergence from strict zero-Covid lockdown measures

Fonterra chief executive Miles Hurrell has said he expects Chinese demand to start returning to normal towards the end of this calendar year.

Hurrell said Fonterra remained “very positive” about the Chinese market over the medium to long term due to its favourable demographics with a growing middle class and increased consumption of dairy product.

Davison said buyers were cautious and demand out of China remained “bearish” after local milk production increased.

In the short-term, summer heat waves in China may stimulate demand for liquid milk and products like ice cream, while lower interest rates and other Government stimulus measures may boost demand over the coming six months, he said.

Still, he said that may not drive prices higher on the GDT.

The New Zealand milk co-operative, which is owned by about 10,500 farmers, controls nearly a third of the world dairy trade.

GDT Events is owned by New Zealand’s Fonterra Co-operative Group Ltd, but operates independently from the dairy giant.

U.S.-listed CRA International Inc is the trading manager for the Global Dairy Trade auction, which is held twice a month, with the next scheduled for July 4.

Source : Reuters and Stuff NZ June 20th 2023

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