Prices in the latest Global Dairy Trade (GDT) auction, the 5th sale of the 2017/18 season, rose 0.3% following a 0.4% decline at the previous sale.
Whole Milk Powder prices, however, fell 1.6% following a 0.6% decline previously while Skim Milk Powder prices fell 1.2%. There was a fresh advance in butter prices which increased 3.8% from the previous auction to just below the $6,000 per tonne.
Prices remain slightly below highs seen in December 2016 which will cause some concern, although the main feature has been a sharp decline in volatility over the next four months.
New Zealand dairy co-operative Fonterra remains optimistic surrounding demand trends in China with expectations of firmer demand for milk products as well as butter and cheese.
Global demand for butter has also continued to be an important factor with wholesale prices rising sharply.
Prices on the New Zealand NZX market have traded at a substantial discount to EU prices which should put some upward pressure on GDT prices over the next few weeks.
Futures markets suggested that Whole Milk Powder prices were likely to increase at least 3% at the latest auction and the latest release will, therefore, be a significant disappointment.
The New Zealand dollar traded sharply higher on Tuesday with a break above 0.7200 in NZD/USD triggering a fresh round of strong buying as the US currency generally was unable to gain any traction. NZD/USD was resilient after the data as US weakness remained the dominant factor.