September 18, 2018 / 11:01 PM / 8 months ago

UPDATE 1-Global dairy prices fall for third time in a row, despite signs of robust demand

    * Global dairy prices drop 1.3 pct
    * Third fall in a row
    * Beats market expectations on strong demand despite

 (Recasts, adds analyst comment and market reaction)
    By Charlotte Greenfield
    WELLINGTON, Sept 19 (Reuters) - Global dairy prices fell at
the third fortnightly auction in a row early Wednesday as New
Zealand's supply of key products ramped up. 
    The GDT Price Index dipped 1.3 percent to an average selling
price of $2,934 per tonne, after falling 0.7 percent at the
previous sale.
    The drop was led by a 3.5 percent fall in cheddar prices and
a 1.8 percent easing in values for whole milk powder (WMP), the
most widely traded item.
    However, that was less than the 4.7 percent fall in WMP
prices expected by futures markets, as New Zealand dairy
producer Fonterra          had signaled increased supply after
recovering from bad weather that had hampered production at the
start of the year.
    "WMP prices were therefore expected to come down due to the
supply pressure," said Amy Castleton, dairy analyst at AgriHQ.
    The amount of WMP sold lifted 5 percent, led by North Asian
buyers, suggesting strong demand and limiting downward price
pressure even as supply expanded.
    In total, 39,143 tonnes was sold at the latest auction, up
0.9 percent from the previous one, the auction platform said.
    Ongoing weakness in dairy prices prompted New Zealand's
Synlait Milk on Thursday to trim its forecast payout to farmers
to NZ$6.75 per kgms from NZ$7.00 per kgms set earlier, in the
wake of a similar payout cut by Fonterra.             
    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 edged down in the hours after the auction
from around $0.6598 to $0.6575 but by morning had made up most
of those losses to trade around $0.6592.
    GDT Events is owned by New Zealand's Fonterra, the world's
largest dairy exporter, but operates independently from the
parent company.
    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.
    The next auction is scheduled for Oct. 2.

 (Reporting by Charlotte Greenfield; Editing by Richard Chang)
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