Summarised by Centrist
Overnight results from the Global Dairy Trade auction showed prices rising more than 6 percent, reversing a slide that had seen the index fall nine times in five months.
The lift comes after fears that farming, one of the few bright spots in last year’s economy, may have already peaked.
The increase was stronger than anticipated. Cristina Alvarado, head of dairy insights at the New Zealand Exchange, said a rise had been expected, but the size of the move surprised the market.
Whole milk powder prices jumped more than 7 percent, skim milk powder rose 5.4 percent, and butter increased 3.8 percent. These gains followed a prolonged period in which higher global supply met flat or weakening demand.
Last year, Fonterra cut its farmgate milk price as global dairy markets softened, pointing to strong milk flows from New Zealand, Europe, and the United States. That supply-driven pressure had weighed on auction prices, fuelling concern among farmers that returns would continue to slide.
The latest auction marked a shift in that balance. Total volumes offered for sale were lower, while buyer demand increased, pushing prices higher. Alvarado said the drop in volumes reflected New Zealand milk production moving past its seasonal peak.
Buyers from the Middle East doubled their share of purchases, accounting for around one fifth of total buying at the auction and was a main driver behind the rebound.
