June 5, 2018 / 10:07 PM / 4 months ago

UPDATE 1-Global dairy prices fall, muted by ramped up New Zealand supply

    * Global dairy prices dip 1.3 pct
    * Pares previous month's gains which saw prices hit 9 month
high
    * Result due to stronger supply in key products -analyst

 (Recasts; adds analyst comment, market reaction)
    By Charlotte Greenfield
    WELLINGTON, June 6 (Reuters) - Global dairy prices fell from
nine-month highs hit the previous month at a fortnightly auction
held early on Wednesday as strong supply muted buyers'
willingness to pay for key products such as whole milk powder.
    The GDT Price Index dipped 1.3 percent to an average selling
price of $3,487 per tonne in the auction held in the early hours
of the morning, after jumping 1.9 percent at the previous
auction.
    That pointed to possible wobbles in a recovery that had seen
New Zealand dairy company Fonterra Co-operative Group Ltd
                 , lift its forecast payout prices to farmers
just the previous month.             
    Prices for whole milk powder (WMP), the most widely traded
product at the auction, dropped 1.1 percent as buyers were faced
with stronger supply, largely due to production in New Zealand,
the world's largest dairy exporter, picking up after being
hampered by bad weather earlier in the year.
    Fonterra had said on Tuesday that its total New Zealand milk
production in April rose 3 percent, driven largely by more
favourable weather conditions.             
    "Buyers did purchase more WMP than they did at the May 15
event, but they were unwilling to pay more for it," said Amy
Castleton, dairy analyst at AgriHQ.
    A total of 21,580 tonnes was sold at the latest auction, an
increase of 18.8 percent from the previous one.
    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 dipped as low as $0.6999 in the wake of
the auction, but later made back most of its losses to trade
around $0.7024.
    GDT Events is owned by Fonterra, but operates independently
from the dairy company.
    The New Zealand milk co-operative, which is owned by about
10,500 farmers, controls nearly a third of the world dairy
trade.
    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 June 19.

 (Reporting by Charlotte Greenfield and Bangalore Commodities
Desk)
  
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