WELLINGTON (Reuters) - Global dairy prices dropped for the fourth time in a row at an auction early on Wednesday, weighed down by a poor showing for butter, but key products such as whole milk powder posted a surprise pick up.
The GDT Price Index dipped 1.7 percent, with an average selling price of $3,222 per tonne, in the auction held in the early hours of the morning, after falling 5 pct at the previous sale.
Butter plummeted 8.1 percent as it continued to ease off nine-month highs hit in May. That, combined with falling price for anhydrous milk fat, which dropped 5.2 percent, and cheddar, which eased 3.3 percent, dragged on the index.
Whole milk powder, however, started a surprise recovery, rising 1.5 percent after five consecutive losses and beating futures markets expectations prices that it would fall again.
“There was a lift in the number of buyers from North Asia at this event, so it’s likely that buyers from China bought some coverage for the medium term,” said Amy Castleton, dairy analyst at AgriHQ.
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 kiwi currency was trading up 0.1 percent at $0.6780 on Wednesday morning, though it sat below a one-week high of $0.6840 hit overnight, largely on the back of a stronger U.S. dollar.
The mixed result likely gave investors little in the way of direction as dairy prices remained low on average but the country’s key goods export, whole milk powder, performed well.
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 total of 25,454 tonnes was sold at the latest auction, falling 4 percent from the previous one, the auction platform said on its website.
The auctions are held twice a month, with the next one scheduled for August 7.
Reporting by Charlotte Greenfield and Bangalore Commodities Desk; Editing by Hugh Lawson