(Recasts, adds analyst comment and market reaction)
WELLINGTON, Nov 21 (Reuters) - International dairy prices continued their downward slide in a fortnightly auction on Wednesday, as volumes increased and prices of key products dropped.
The Global Dairy Trade (GDT) Price Index dipped for the seventh time in a row, by 3.5 percent, with an average selling price of 2,727 U.S. dollars per tonne. The index had fallen 2 percent in the previous sale.
A total of 42,966 tonnes was sold at the latest auction, an increase of 1.3 percent from the previous, the auction platform said on its website (www.globaldairytrade.info).
Anhydrous Milk Fat (AMF) and butter led the decline in prices, down 9.4 percent and 9.6 percent respectively, to more than two-year lows. Whole milk powder (WMP), the most widely traded item, fell by 1.8 percent.
“Expectations that milk production will remain strong heading into summer appear to be supporting buyer patience, and that could keep prices under pressure a little longer,” ANZ Research said in a note.
WMP volume offerings are currently at their seasonal peak and up strongly from last year, reflecting favourable weather conditions so far this season, ANZ said.
Most of the whole milk powder sold went to North Asia, which includes China.
The price of skimmed milk powder dropped 1.6 percent though Cheddar cheese prices eked out a 0.2 percent gain.
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 depreciated to USD $0.6794 but still remained well above the October lows.
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 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, with the next scheduled for December 4. (Reporting by Praveen Menon; editing by Andrew Roche)