October 18, 2016 / 7:05 PM / a year ago

Global dairy prices rise in overnight auction

WELLINGTON, Oct 19 (Reuters) - International milk prices
rose in the overnight Global Dairy Trade auction, after prices
dipped in the prior auction. 
    The GDT Price Index, which covers a variety of products and
contract periods, rose 1.4 percent, with an average selling
price of $2,965 per tonne, in the auction held on Tuesday. The
GDT Price Index fell 3 percent in the prior auction. 
    Whole milk powder, which makes up the bulk of the auction,
rose 2.9 percent while butter was up 2.6 percent. 
    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.
    A total of 31,525 tonnes was sold at the latest auction,
falling 7.1 percent from the previous one.
    Westpac Bank Senior Economist Anne Boniface said an
"important catalyst" for the lift in prices was Fonterra's
announcement it would reduce the amount of product on offer due
to wet weather in recent weeks reducing milk collection in some
    The auctions are held twice a month, with the next one
scheduled for Nov. 1.
    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; Editing by Ruth Pitchford)

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