The price of skim milk powder droped, as did cheddar and butter, in the global dairy auction. Photo: 123rf
Dairy prices have extended their losing streak in the global auction, taking the dairy index to its lowest level since January last year.
The average price at the fortnightly auction fell 4.6 percent to US$3723 a tonne, after falling 3.5 percent in the previous auction.
Prices have generally been falling since hitting a record high in March.
The price of whole milk powder, which strongly influences the payouts for local farmers, fell 4.4 percent to US$3421 a tonne.
Among other categories, skim milk powder fell sharply, 6.9 percent to US$3250 a tonne, cheddar fell 3.9 percent to US$4769 and butter fell 2.6 percent to US$4851.
NZX dairy insights manager Stuart Davison said weak demand was the key driver in the fall.
"The demand at this auction was so weak that only whole milk powder and butter managed to register a 2.0 demand-to-supply ratio at the outset of the auction, with every other product on offer starting out with only a 1.5 demand-to-supply ratio.
By the end of the auction demand for whole milk powder was lower, Davison said.
The sharp fall in skim milk powder was expected.
"The strong skim milk powder was always going fall off the edge when buyers were in the right position to be able to step away.
"Supply has rapidly caught up in the interim, with all major producing regions now flush with skim milk powder, and now buyers can be picky on their skim milk powder purchases."