Dairy products have fallen 1.7% in the latest Global Dairy Trade auction but there are still positive signs with a rise in whole milk powder.
This is good news for the heavy transport, machinery and automotive industries.
The average price was down US$10 to US$3222 per tonne. However, whole milk powder was up 1.5% at US$2973 per tonne, while skim milk powder was up 0.8% at US$1959 per tonne.
Anhydrous milk fat was down 5.2% to US$5629 per tonne and butter down 8.1% to US$4953 per tonne.
ASB senior rural economist Nathan Penny says dairy markets remain nervous around the US-China trade tensions and prices also reflect currency movements.
Yet there are signs the diary market is stabilising, he says.
“Both whole and skim milk powder prices rose. The 9% overall fall in the past two months is a modest move by historical auction standards where 20% is more akin to significant move.
“All things considered, this downward move to date could have been worse. In particular, it seems that relatively healthy global dairy demand is still underpinning prices.
“In addition, a large chunk of the downward price move to date can be explained by lower currencies in key dairy markets. For example, the Chinese yuan is down over 5% against the USD over the 2-month period,” Penny says.
