March 20, 2018 / 8:12 PM / a year ago

UPDATE 1-Dairy prices fall, volumes drop at auction -GDT Events

 (Recasts with analyst comment)
    By Marius Zaharia
    WELLINGTON, March 21 (Reuters) - Global dairy prices dropped
for the third consecutive time at a fortnightly auction on
Wednesday as production in New Zealand continued its slow pickup
from weaker levels earlier in the season.
    The world's largest dairy exporter curbed its supply late
last year due to unusually dry weather, but the pasture
conditions have since improved.
    The Global Dairy Trade Price Index dipped 1.2 percent, with
an average selling price of $3,632 per tonne, auction platform
GDT Events said. The index fell 0.6 pct at the previous sale.
    A total of 18,635 tonnes was sold at the latest auction,
falling 3.4 percent from the previous one. The auctions are held
twice a month, with the next one scheduled for April 3.
    "We expect prices to remain at or around current levels
until the end of the season," Nathan Penny, senior rural
economist at ASB, said in a note.
    "While (New Zealand) production is improving, the recovery
from weak production earlier in the season is progressing only
gradually. With global demand also firm, we expect the global
dairy market will remain largely balanced and for prices to
track sideways as a result."
    The New Zealand dollar          fell to its lowest level
since early February at $0.7177. 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
    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, including Dairy America and Murray
Goulburn         , use the platform to sell milk powder and
other dairy products.

 (Reporting by the Bangalore Commodities Desk and Marius Zaharia
in Wellington. Editing by Jane Wardell and Gareth Jones)
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