WELLINGTON (Reuters) - Global dairy prices edged lower at an auction early on Wednesday as prices declined for whole milk powder, the most widely traded item.
The Global Daily Trade (GDT) Price Index edged down 0.4%, with an average selling price of $3,202 per tonne, having fallen 0.2% in the previous sale two weeks ago and slumping 2.6% at an auction in early August.
Prices for whole milk powder (WMP) dropped 0.8%, largely in line with futures markets expectations. Prices of Anhydrous Milk Fat dropped 1.5%.
“The WMP outcome was very much in line with what futures pricing had been indicating, and movements in a number of product prices were relatively muted,” ASB Bank Chief Economist Nick Tuffley said in a note.
“It is reassuring that – to date – the escalating U.S.-China trade tensions and recent weakness in the Chinese renminbi are not having a material impact on dairy prices,” he added.
Fonterra on Wednesday maintained its current farmgate milk price forecast of NZ$6.25 to NZ$7.25 per kg of milk solids for 2019/2020 but warned of risks to the global dairy market from the international trade tensions.
A total of 39,689 tonnes was sold at the latest auction, an increase of 15.3 percent from the previous one, the auction platform said on its website (www.globaldairytrade.info).
The 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 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 use the platform to sell milk powder and other dairy products.
The next auction is scheduled for Sept. 17.
Reporting by Praveen Menon; editing by Grant McCool
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