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WELLINGTON, Feb 17 (Reuters) - - Global dairy prices continue to fall - No recovery expected until late 2016 - Market sentiment remains bearish, analyst says
International dairy prices continue to fall, adding to pressure on New Zealand's cash-strapped farmers.
Prices eased and volumes dropped in this month’s second auction held by New Zealand's Fonterra Co-operative Group.
Fonterra's GDT Price Index dipped 2.8 percent, with an average selling price of $2,235 per tonne, in the auction held overnight Tuesday.
Global dairy prices have slumped around 55 percent since early 2014 and the majority of New Zealand farmers are already operating below break-even. Dairy forms the backbone of the nation's economy, representing about 25 percent of exports. The central bank has flagged the sector as a key risk to financial stability.
A total of 22,021 tonnes was sold at the latest auction, falling 10 percent from the previous one, according to GlobalDairyTrade.
The auctions are held twice a month, with the next one scheduled for March 1.
AgriHQ dairy analyst Susan Kilsby said overall market sentiment remains "very bearish" and a sustained price recovery is not expected until the later part of 2016.
While prices are now at very "attractive levels for buyers," it is difficult for a sustained market recovery to occur while global milk supplies continue to grow, she said.
The auction platform was set up by Fonterra and is operated by trading manager CRA International.
Participants include Fonterra, Amul, Arla Foods, Arla Foods Ingredients, DairyAmerica, Euroserum and Murray Goulburn. Products traded on the twice-monthly auction include whole milk powder, skim milk powder, butter, cheese, anhydrous milk fat, among others.
The New Zealand milk co-operative, which is owned by about 10,500 farmers, controls nearly a third of the world dairy trade.
