Global dairy prices increased for a second successive sale, rising 1.9% at Fonterra's globalDairyTrade internet auction held yesterday.
The sale indicated an underlying strength in dairy markets, with prices for the three supply contract periods through to May 2011 showing a continued firming for most products offered.
A further increase in price at yesterday's sale was widely expected, and followed a sharp 16.9% rise at the sale two weeks ago, as buyers replenished depleted inventory and prepared for a possible shortage of feed grain for cows after drought forced Russia to restrict grain exports.
The average price over all products offered on globalDairyTrade was $US3663 a tonne ($NZ5090) and the trade weighted index over all products 1.9% higher.
Compared with the sale two weeks ago, anhydrous milk fat prices for contracted supply through until May 2011 was 10.2% higher at $US5189 a tonne ($7207), butter milk fat eased 6.4% to $US2992 ($4155), skim milk powder rose 1% to $US3229 ($4484) and whole milk powder was 1.4% higher at $US3602 ($5002).
There were 127 participating bidders.
Earlier this week, Rabobank reported that after falling in July and August, global dairy prices rallied in September but not enough to reverse powder prices for the third quarter that were between 5% and 14% lower than the previous quarter.
In a report on the global dairy scene, Rabobank said the initial price pressure was due to growth in supply, and forecasts that milk flows would continue to grow, but that proved to be short lived.
The bank forecasts ample supply of dairy products for the last quarter of this year, with strong milk volumes from the southern hemisphere following European and United States exports mid-year.
"But with the twin giant importers, Russia and China, expected to be extremely active, prices are likely to hold their ground in coming months," the bank said.
