April 3, 2018 / 9:38 PM / 18 days ago

UPDATE 1-Dairy prices fall as New Zealand production shows signs of recovery

 (Updates throughout)
    WELLINGTON, April 4 (Reuters) - Global dairy prices dropped
for a fourth consecutive time at a fortnightly auction on
Wednesday as production in New Zealand showed signs of a
potential turnaround after weak levels earlier in the season.
    The world's largest dairy exporter curbed its supply late
last year due to unusually dry weather.
    Leading company Fonterra Co-operative Group Ltd         
reported on Tuesday a 2 percent drop in New Zealand output
volume in February, compared with a 5 percent fall in January.
            
    The Global Dairy Trade Price Index dipped 0.6 percent, with
an average selling price of $3,477 per tonne, in the auction
held at midnight, New Zealand time. The index fell 1.2 percent
at the previous sale.
    A total of 17,222 tonnes was sold at the latest auction,
falling 7.6 percent from the previous one. The auctions are held
twice a month, with the next scheduled for April 17.
    "While (New Zealand) production is improving, the recovery
from weak production earlier in the season is progressing only
gradually," Nathan Penny, senior rural economist at ASB, said in
a note, adding he expected steady prices for the rest of the
season.
    The New Zealand dollar        edged higher to $0.7256, as
some in the market expected a deeper drop in dairy prices. The
dairy sector generates more than 7 percent of New Zealand's
gross domestic product.
    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
company. 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.

 (Reporting by Marius Zaharia and the Bangalore Commodities
desk; Editing by Richard Chang)
  
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