May 1, 2018 / 9:59 PM / 22 days ago

UPDATE 1-Dairy prices edge down as supply outlook stronger than expected

    * Global dairy prices fall 1.1 pct
    * Whole milk powder leads losses
    * Reverses previous signs of recovery

 (Recasts; adds analyst comment, market reaction)
    By Charlotte Greenfield
    WELLINGTON, May 2 (Reuters) - Global dairy prices fell at a
fortnightly auction held early on Wednesday, reversing a jump in
the previous auction and casting doubt over an imminent
recovery. 
    The GDT Price Index dipped 1.1 percent, with an average
selling price of $3,465 per tonne, in the early hours of
Wednesday morning.
    The index had risen 2.7 pct at the previous sale,  snapping
four consecutive auctions of falls and leading to hopes that
prices would bounce back after struggling in recent months.
    Whole milk powder (WMP) led losses, with prices falling 1.5
percent, a result at odds with futures markets which had
suggested a jump of around 3 percent. 
    That was in part due to New Zealand dairy giant Fonterra's
                  announcement the previous day that it was
expecting a 2 percent drop in milk this season, a more robust
result than previously signaled as bad weather conditions eased
up.
    "An indication of a little more product than previously
expected being available before the end of the season may have
meant buyers were less willing to pay more to secure WMP at this
event," said AgriHQ analyst Amy Castleton in a research note.
    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 currency sank to a five-month low of $0.6988 overnight
in part due to the auction results as well as strength in the
U.S. dollar. The kiwi last stood at $0.7004.
    A total of 19,508 tonnes was sold at the latest auction, an
increase of 1.3 percent from the previous one, the auction
platform said on its website
    GDT Events is owned by Fonterra Co-operative Group Ltd but
operates independently from the dairy giant.
    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 next auction is scheduled for May 15.

 (Reporting by Charlotte Greenfield and Bangalore Commodities
Desk
Editing by James Dalgleish)
  
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