Photo: 123RF
Global dairy prices have ended their long-running losing streak in the global dairy trading auction (GDT) overnight.
The average price at the fortnightly sale rose 4.9 percent to US$4001 per tonne, after falling 2.9 percent at the previous auction.
It was the second time in 13 auctions prices had risen since they hit a record high in March.
The price of whole milk powder, which strongly influences the payouts for local farmers, rose 5.1 percent to US$3310 per tonne.
Prices for other products, including butter, cheddar and skim milk powder also increased.
NZX dairy insights manager Stuart Davison said it was too early to say if the market had turned.
"But it is clear that the global dairy market is willing to chase product at current price points, and that demand is apparent," he said.
High level of demand, particularly from South East Asia, which drove the price increases in anhydrous milkfat and whole milk powder, Davison said.
"The greater Chinese market usually drives GDT results, however, over the last seven months of GDT, it is clear that [South East Asian] buyers are coming more and more to Oceania channels for their dairy needs.
"This result should also be a clear signal to that some of the market are likely starting to price in an expected lack of milk supply."
The softness in dairy prices over the past six months saw dairy giant Fonterra [https://www.rnz.co.nz/news/business/473541/fonterra-trims-forecast-milk-payout-for-current-season
trim the midpoint of its forecast milk price payout] for the current season by 25 cents.
Davison said local farm gate milk price expectations would bounce following last night's auction.
There was a case that prices would appreciate in the coming months, given that surging power prices in Europe was affecting milk supply and Chinese participation in the market was likely to increase when strict lockdown restrictions ease, he said.