![Global Dairy Trade prices lift again with fifth consecutive rise at auction Global Dairy Trade prices lift again with fifth consecutive rise at auction](/images/transform/v1/crop/frm/8yYKiJXq2Ks3fRrBZY5gaD/43f0e47a-a47c-42d7-bc83-196956c05af7.jpg/r0_3_3000_1690_w1200_h678_fmax.jpg)
Global dairy prices have lifted again in a week when Australian processors announced lower opening farmgate milk prices for season 2024-25.
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The Global Dairy Trade auction concluded on June 4 with the GDT price index up 1.7 per cent.
The auction saw rises across most commodities with only lactose defying the trend, down 1.9pc.
Butter milk powder led the lift, up 10.4pc, with the key whole milk powder index up 1.7pc and skim milk powder up 3pc.
Cheddar barely moved - up just 0.2pc.
The average price and WMP prices are considerably higher than 12 months ago and the beginning of this year.
The average price is up 12.5pc on the same auction last year and 13.7pc on the first auction in January.
The WMP price is 18pc higher than at the same time last year and 13.9pc than in January.
But the cheddar price index is not so rosy.
It is down 9pc on the same time last year but has lifted 2pc on the January price.
Westpac NZ senior economist Michael Gordon said the June 4 GDT auction was another solid result, its fifth straight increase.
"As we've seen in recent auctions, China was a significant buyer although less present than they have been in past years," he said.
"Buyers from South East Asia and the Middle East increased their share of WMP purchases, while Chinese demand was more notable in butter."
Mr Gordon said Fonterra had been cautious in announcing its forecast 2024-25 price for its New Zealand farmers.
The giant NZ co-op announced a price range of $NZ7.25-$NZ8.75 per kilogram of milksolids, giving a midpoint of $NZ8/kg.
"That's a relatively conservative view compared to our existing forecast of $NZ8.40/kg - a view that we've held since March, when GDT auction prices were somewhat lower than they are today," he said.
"Futures markets are closer to our view, currently pricing a return of $8.55/kg.
"Indeed, Fonterra acknowledged that they've taken a cautious view at this stage, citing uncertainty around key factors such as the strength of Chinese consumer demand."
Mr Gordon said Westpac was assuming that milk powder prices would hold at around their current levels on average over the season.
"That's a reasonable baseline given that powder prices are around their long-term averages at the moment - so they're neither looking particularly stretched nor unsustainably low," he said.
"What's more, the global milk market seems to be reasonably balanced as the new season begins, and both demand and production are expected to record only modest growth in the year ahead."
But he did warn things could change the balance - including droughts/flooding, policy changes or geopolitical tensions.
"But these are unpredictable by nature," he said.
Milkfat prices offered an upside risk to the Westpac forecast price.
If milkfat prices maintained their recent levels, it could push the price to $NZ8.60/kg MS.
"It's possible that there's been a permanent step-up in the demand for products like butter (for instance, pastries have been on the rise in Asia for many years)," he said.