UPDATE 1-Global dairy prices soar in latest auction

(Updates to add detail, comment from analyst)
    Aug 17 (Reuters) - International milk prices rallied in the
overnight Global Dairy Trade auction, adding to the view that
the market may be on the road to recovery. 
    The GDT Price Index, which covers a variety of products and
contract periods, rose 12.7 percent, with an average selling
price of $2,731 per tonne, in the auction held Tuesday.
    Whole milk powder prices, which make up the bulk of the
auction, soared 18.9 percent while skim milk powder prices rose
3.0 percent and butter rose 14.1 percent. 
    "It was a stunning result and it couldn't have come at a
better time for our farmers.  I think it is now safe to say the
market has turned a corner," said AgriHQ dairy analyst Susan
    Until recently, dairy was the backbone of New Zealand's
economy, representing around 25 percent of exports. But dairy
prices have dropped sharply from their record highs in 2013, due
to China's economic slowdown and global oversupply.
    Sliding prices have put farmers under pressure, with more
than 85 percent estimated to be operating below breakeven
    According to Kilsby, there was strong buying activity out of
China and South East Asia, driving the lift in prices. Kilsby
also said she is more confident that current prices will be able
to hold up "as global milk supply is now retracting rather than
    The auctions are held twice a month, with the next one
scheduled for Sept 6. 
    The auction platform was set up by Fonterra, the world's
largest dairy exporter, and is operated by trading manager CRA
    Participants include Fonterra, Amul, Arla Foods, Arla Foods
Ingredients, Dairy America, Euroserum and Murray Goulburn.
Products traded on the twice-monthly auction include whole milk
powder, skim milk powder, butter, cheese, and anhydrous milk
fat, among others.

 (Reporting by Rebecca Howard)