February 7, 2018 / 12:55 AM / 10 months ago

UPDATE 1-Dairy prices extend 2018 gains on NZ supply concerns

    * Global dairy prices rise 5.9 percent at auction
    * Quantity sold lower than at previous auction
    * NZ weather raising concerns about supply levels

 (Recasts, adds comment from analysts)
    WELLINGTON, Feb 7 (Reuters) - Global dairy prices have
extended their strong start to the year, with analysts saying
buyers were worried that unfavourable weather would hamper
production in New Zealand, the world's top milk exporter.
    The Global Dairy Trade (GDT) Price Index rose 5.9 percent,
the largest increase since November 2016, with an average
selling price of $3,553 per tonne in an auction held early on
Wednesday local time, said auction platform GDT Events.
    Prices have now risen at all three auctions held in 2018,
after falling in five of the final six sales of 2017.
    "Falling milk production in NZ – and revisions to offer
volumes – continue to support prices on GDT," Amy Castleton,
analyst at AgriHQ, said in a report on the auction.
    Whole milk powder (WMP) jumped 7.6 percent at the auction,
while skim milk powder prices were up 7.2 percent.
    "There were no revisions to WMP volumes ahead of this latest
event, but buyers do seem to be more nervous that they will not
be able to fulfil their requirements if NZ milk production
continues to fall," Castleton said.
    "There were a few more winning bidders from North Asia at
the Feb. 6 event than at the Jan. 16 event, and more product was
sold to this region."
    A total of 22,197 tonnes was sold at the latest auction,
4.8-percent less than at the previous one, the auction platform
said on its website (www.globaldairytrade.info).
    In late December, Fonterra                  , the world's
biggest dairy processor, cut its New Zealand milk collection
forecast for the 2017/18 season due to unusually dry weather.
    "NZ weather this dairy season has been all over the place,"
ASB senior rural economist Nathan Penny said in a report, noting
the dry weather that had led to a stall in dairy production had
been preceded by wet weather that had also hampered output.
    "Now in January and February, the wild ride has continued
with storms and flooding in some parts."
    A number of companies, including Dairy America and Murray
Goulburn         , use the platform to sell milk powder and
other dairy products, with roughly half of buyers based in China
as traders there seek to supplement domestic milk supplies.
    The auctions are held twice a month, with the next one
scheduled for Feb. 20.    

 (Reporting by John Mair, Additional reporting by Bangalore
Commodities Desk; Editing by Joseph Radford)
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