Dairy prices at the Global Dairy Trade (GDT) auction dipped 0.7pc overall this week.
Overall prices have now fallen in six out of the last seven auctions, and now are at their lowest since October 2016.
Whole milk powder (WMP) and butter prices led the decline, dipping 2.2pc and 2.8pc, respectively. The WMP price fall was also a touch weaker than the fall signalled by the futures market ahead of the auction.
However, other products fared better. Cheddar and casein led the gains, lifting 4.2pc and 3.7pc, respectively.
Skim milk powder also posted a 2.2pc rise, while anhydrous milk fat and butter milk powder were largely unchanged.
Accoording to Nathan Penny Rural Economist with New Zealand bank ASB the modest overall decline fits with the price weakness normally seen at this time of the year.
“NZ production will peak next month, and the extra availability of NZ product usually dampens prices through the spring.
Looking beyond seasonal factors, he said global dairy markets appear largely balanced.
“NZ production is set to lift this season, albeit moderately – we expect a 2pc lift this season compared to last.
“However, dry weather offshore means exports from other producers are likely to be more scarce than usual over coming months.
“Meanwhile, global demand is mixed, but overall remains relatively positive,” he said.
IFA National Dairy Committee Chairman Tom Phelan said co-ops had taken fright earlier this summer and been overly conservative in just holding base prices, some making do with temporary “support” payments which could readily be whipped out.
Kerry’s Eamonn Scanlon and Glanbia’s Siobhan Talbot have recently expressed confidence in the market place, borne out by the latest European quotes, despite recent negative GDT auctions .
This must lead to higher milk prices from August supplies, he said.
“I think it is important to put GDT auctions in context. The USDA predicts that over 7.5m tonnes of dairy products will be traded globally in the year ending December 2018. The quantities traded through GDT in 2017 were less than 10% of that,” Mr Phelan said.
“Latest European market trends show drought has moderated volumes from June and helped the prices of most commodities rally this month. All co-ops, especially those whose base prices have been allowed fall behind, must increase their August base price and be ready to increase it further before year-end as markets allow,” he said.
Source: Farm Ireland