There was a lift of 2.4% in the overall price index at this week’s Global Dairy Trade (GDT) internet auction of dairy products, but average prices for whole milk powder (WMP) on contracts to be supplied in April, May and June were down by 2.7%, 8.4% and 11.2%, respectively.

This is expected to lead to a further downward revision of the Fonterra New Zealand forecast milk price for the 2014-15 season, as the forecasts to date have been attaching strong significance to higher prices on the “far” contracts at recent GDT auctions.

At Tuesday’s auction, WMP averaged US$2,270/t, which is less than half its price at the GDT at the end of last year and until the end of February this year. WMP accounted for more than half of the 35,390t of product sold at this event.

Butter prices were the brighter side of this GDT event, with all contracts up in price from the previous auction and an overall improvement of 10.4%, albeit off a low base. The average for butter was US$3,145/t and this was the third consecutive rise. The price is still a long way short of the level reached at the end of February, when it was over $4,700/t.

IFA National Dairy Committee chairman Sean O’Leary said the auction result confirmed the trend established in the previous three auctions of a strong recovery in butter and butteroil (AMF) prices.

“I believe the results of the GDT confirm the widely held view that global prices had reached unsustainably low levels, and that we are now in a price recovery phase. While I am aware that it will be some time before this translates into a recovery in farm prices, it certainly should help transform market sentiment internationally, and set the scene for improved commodity prices during 2015,” he said.

Meanwhile, the board of Dairygold co-op this week agreed a 2c/litre milk price cut for November. It will bring the co-op’s price to 30c/litre including VAT.