After a slight drop in prices at the first Fonterra GDT (Global Dairy Trade) of 2014, dairy product prices are on the rise again. The GDT Index was up by 1.4% for the 41,024 tonnes of dairy produce sold at Fonterra’s auction this week.

All dairy products, with the exception of SMP (skimmed milk powder), sold at higher prices than previously.

Butter prices averaged $4,657/t, which was 10.8% above prices achieved at the 7 January event, and continued with strong contract prices right through to May. AMF (butter oil) prices were up by 2.2% to $5,641/t.

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BMP (buttermilk powder) prices continued to climb to $5,244/t, the highest price ever paid for BMP on the GDT platform.

Average prices for WMP (whole milk powder) increased by 0.1% to $4,943/t, recouping some of the loss in prices that occurred at the previous two events.

SMP average price eased back by 0.5% to $4,698/t and it was the only product at this event that sold for a lower price than at the previous auction.

There was also a 10.4% increase in cheddar prices. This brought the average contract price of this product to $5,133/t.

Prices for Rennet Casein were 4.2% higher, at $12,390/t, while MPC70 (milk protein concentrate) sold for $9,657/t, which was 7.2% more than at the previous event.

These prices would return an equivalent milk price in excess of 42c/l to farmers, when converted to 3.3% protein and 3.6% fat.

Commenting on the auction, Sean O’Leary, chairman of IFA’s dairy committee, said: “The continued rise in butter prices over the last few auctions to the current level of $4,657/t has narrowed the gap which had existed for most of 2013 between EU and other global markets. As we progress towards the EU seasonal peak, this should minimise any potential decrease in EU butter prices.”

He urged co-ops to hold their milk price for the remainder of this year.