June 19, 2018 / 10:10 PM / 5 months ago

UPDATE 1-Global dairy prices fall for second time in a row due to greater supply

    * Global dairy prices dip 1.2 pct
    * Skim milk powder falls for first time since April
    * Stronger supply muting prices despite strong demand -
analysts

 (Recasts with market reaction, analyst comment)
    By Charlotte Greenfield
    WELLINGTON, June 20 (Reuters) - Global dairy prices fell for
the second time in a row at a fortnightly auction held early on
Wednesday as stronger supply muted what buyers were willing to
pay for key products.
    The GDT Price Index dipped 1.2 percent, with an average
selling price of $3,481 per tonne, in the auction held in the
early hours of the morning, after slipping 1.3 percent off
nine-month highs at the previous sale.
    The result cast doubt on an earlier rally in prices that had
prompted New Zealand dairy company Fonterra Co-operative Group
Ltd                  , to lift its forecast payout prices to
farmers in May.             
    Prices were being dampened by a faster-than-expected
recovery in supply in the world's largest dairy exporter, New
Zealand, which had previously seen bad weather hamper production
from late 2017.
    In spite of robust demand, the added supply was muting
prices, with skim milk powder (SMP) posting a 1.1 percent
decline, its first since April.
    "Demand for SMP was strong. There was a greater volume sold
at this event than at the previous event. But buyers were
evidently not willing to pay more," said Amy Castleton, analyst
at Agri HQ.
    Whole milk powder, the most widely traded product, fell 1
percent, a slightly better result than futures markets had
suggested.
    A total of 21,634 tonnes was sold at the latest auction, an
increase of 0.3 percent from the previous one, the auction
platform said on its website.
    The auction results can affect the New Zealand dollar       
as the dairy sector generates more than 7 percent of the
country's gross domestic product.
    The kiwi fell to a three-week low of $0.6883, but that was
largely due to growing concerns over intensifying trade tensions
between the United States and China.
    GDT Events is owned by Fonterra but operates independently
from it. The New Zealand milk co-operative, which is owned by
about 10,500 farmers, controls nearly a third of the world dairy
trade.
    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 one
scheduled for July 3.

 (Reporting by Charlotte Greenfield and Bangalore Commodities
Desk)
  
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