December 18, 2018 / 9:06 PM / 6 months ago

UPDATE 1-Global dairy prices rise for second auction in a row

* Global dairy prices rise 1.7 percent

* Second lift in a row

* Prices have been falling since May amidst higher global supply (Recasts, adds analyst comment, market reaction)

By Charlotte Greenfield

WELLINGTON, Dec 19 (Reuters) - Global dairy prices rose for just the second time in six months in a fortnightly auction held early on Wednesday.

The GDT Price Index climbed 1.7 percent, with an average selling price of $2,844 per tonne, in the auction.

The index rose 2.2 percent at the previous sale, according to GDT Events, after falling since May.

Butter prices surged 4.9 percent while skim milk powder prices rose 3.4 percent.

“This is likely due to tighter availability of stocks on offer compared with the previous event,” said Robert Gibson, dairy analyst at NZX.

Prices for whole milk powder, the most heavily traded item, were up just a touch at 0.3 percent, in contrast with futures market expectations of 3 percent lift.

“This result was likely due to higher volumes ... on offer compared with the previous event, preventing any further increase in price,” Gibson said.

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 had surged almost 0.7 percent $0.6879, but that was largely due to strong business confidence data released on Tuesday afternoon.

A total of 36,181 tonnes was sold at the latest auction, falling 0.7 percent from the previous one, the auction platform said on its website.

GDT Events is owned by New Zealand’s Fonterra Co-operative Group Ltd, but operates independently from the dairy giant.

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 auctions are held twice a month, with the next one scheduled for Jan. 2. (Reporting by Charlotte Greenfield; Editing by Alison Williams)

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