July 17, 2018 / 8:57 PM / a month ago

UPDATE 1-Global dairy prices fall even as whole milk powder posts surprise pick up

    * Dairy prices fall 1.7 pct
    * Fourth fall in a row, dragged by butter prices
    * Whole milk powder posts surprise pick up

 (Re-casts, adds details on different products, analyst comment)
    By Charlotte Greenfield
    WELLINGTON, July 18 (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)
  
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