By Rebecca Howard
WELLINGTON, New Zealand--International dairy prices fell in the
overnight GlobalDairyTrade Internet-based auction, an international
trading platform established by New Zealand's Fonterra Co-Operative
Group Ltd. (FCG.NZ).
The GDT Price Index, which covers a variety of products and
contract periods in the auction, fell 1.8% compared with the prior
auction on May 6, with the average selling price being $3,873.
Dairy prices are down more than 20% since early February.
The slide in prices "will be closely watched by the Reserve Bank
of New Zealand," said BNZ FX Strategist Kymberly Martin. "It will
be increasingly uncomfortable" with a high New Zealand dollar on a
trade weighted basis "while NZ commodity prices come off the
boil."
The GDT Price Index is widely considered a market reference
price for dairy products. Products on offer include whole milk
powder, skim milk powder, butter, cheese and anhydrous milk fat.
The result tends to impact the New Zealand dollar as dairy forms
the backbone of the economy, representing around 25% of exports.
The New Zealand dollar is trading at US$0.8576 early in New Zealand
versus US$0.8620 late Tuesday, ahead of the auction, as "the weaker
GDT auction kept the NZD under pressure," ANZ Bank said.
The average selling price for whole-milk powder--which makes up
the bulk of the auction--was $3,877 a metric ton, down 1.1%
compared to the prior auction.
Participants in the auction include Fonterra, which produces
about a third of the world's traded dairy products, Europe-based
Arla Foods and Murray Goulburn Co-Operative of Australia and
U.S.-based DairyAmerica Inc, as well as India's Amul and Euroserum,
a unit of Sodiaal International.
Write to Rebecca Howard at rebecca.howard@wsj.com