World dairy prices show tentative recovery

World dairy markets are showing tentative signs of recovery, after a key global benchmark rose for the third time running.

The average price on the fortnightly Global Dairy Trade auction rose 1% on Tuesday (20 January), following 3.6% and 2.4% increases in the previous two sales.

See also: More prices and trends

Milk powder results were particularly encouraging, as SMP rose 1% to $2,389/t (£1,579/t) and WMP jumped 3.8% to $2,402/t (£1,591/t).

But butter prices stayed almost flat at $3,564/t (£2,361/t) and cheddar values slumped 4.3% to $2,961/t (£1,961/t).

The improving prices would have been helped by less product being offered, with the amount sold back 6% on two weeks ago.

A report by DairyCo questioned whether drier soil in New Zealand’s North Island and the eastern parts of South Island would pull back the country’s milk output and ease the pressure on world markets.

Farmers’ margins would already be tighter as their expected milk payment has dropped about 40%.

But New Zealand milk production is still up 4.9% on the year and farmers have big cuts of hay and silage from 2014 to feed over the dry period.

“In a global market context, there is little to suggest that exports from New Zealand will slow down significantly, which may delay any price recovery,” DairyCo’s report said.