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Global Dairy Trade: powder milk leads price decrease

The hope to see prices of dairy products increasing has been disappointed during the Global Dairy Trade (the global stock exchange for dairy products) when new minimum were recorded compared to the last 6 years, the powder milk leading the trend downward. The Global Dairy Trade index, based on prices paid at auctions twice a month, decreased 5,9% from last trading. The most significant decreasings concern, indeed, whole powder milk, which avarage prices decreased 10,8% compared to last auction, on the 16th of june. Skimmed milk prices decreased 5,8% while anhydrous fat of powder milk decreased 1,6%. This is the 8th negative prices session in a row. John Spanhour, broker from Chicago for dairy products, explains that prices decrease is the result of a continous exceeding offert due, above all, to the weak demand of a key importer: China. To solve the problem, either China return to previous demand levels, or producer countries need to calculate again as soon as possible the offer, taking in account the chinese situation. Mr Spainhour also underlined that the price of powder milk is certainly the most penalized because it is used in China in a key industry: milk for children. Who is paying the highest price of this situation is New Zealand, main exporter of powder milk, that invested in production capacity in the period of main expansion of the chinese demand. Now, with a low demand in China, there is an exceeding offer, with a negative influence in the national economy.

The negative influence on prices of change rate neozealand dollar vs US dollar

Another fact that have influence on current prices of milk is the change rate between neozealand currency and the US currency. The first one reached the minimun level of the last 5 years vs the US dollar. The neozealand dollar suffers the low change rate of the Central Bank and a serie of economic data not advantageous, also causing the difficult moment for the dairy industry which is one of the biggest in the country.