Dairy prices started 2013 on a firm note at GlobalDairyTrade
auction, rising to their highest in nearly a year, amid doubts over prospects
for milk output in New Zealand, the top exporting country.
Prices at the first GlobalDairyTrade of the year rose 2.0%
from the last event, two weeks ago, to their strongest since mid-January last
year, according to an auction index.
The increase was led by skim milk powder, prices of which soared
4.7% to a 19-month top of $3,572 a tonne, as an average of the contracts on
Cheddar prices rose 1.9% to $3,458 a tonne. Values of whole
milk powder, which makes up the vast majority of volumes on offer at GlobalDairyTrade,
rose 1.6% to $3,199 a tonne, although still not enough to avoid extending their,
atypical, discount to skim milk powder prices.
The price rises tally with a drop in overall volumes on
offer by Fonterra, which runs the auction and provides the majority of product
sold through it.
Fonterra reduced by 11% the volume of its own anhydrous milk
fat on offer, and by one-third the quantity of its skim milk powder for sale, cutbacks reflecting availability at the time contracts on offer at GlobalDairyTrade come up for physical delivery.
The volume of whole milk powder was nudged 3.3% higher to
New Zealand slowdown?
The price rises also come amid doubts that New Zealand will
be able to maintain its strong start to 2012-13 for milk output, with
production rising 6.5% in the June-to-October period, the first five months of
the marketing year.
Rabobank has warned ago that "dry conditions were
threatening in some parts through November".
And analysts at consultancy Agrifax cautioned that a pasture
growth index showed growth potential had been "below normal" for much of December.
New Zealand milk production has not since December 2010
shown a year on year decline.