WELLINGTON, Oct 19 (Reuters) - International milk prices rose in the overnight Global Dairy Trade auction, after prices dipped in the prior auction.
The GDT Price Index, which covers a variety of products and contract periods, rose 1.4 percent, with an average selling price of $2,965 per tonne, in the auction held on Tuesday. The GDT Price Index fell 3 percent in the prior auction.
Whole milk powder, which makes up the bulk of the auction, rose 2.9 percent while butter was up 2.6 percent.
Until recently, dairy was the backbone of New Zealand's economy, representing around 25 percent of exports. But dairy prices have dropped sharply from their record highs in 2013, due to China's economic slowdown and global oversupply.
A total of 31,525 tonnes was sold at the latest auction, falling 7.1 percent from the previous one.
Westpac Bank Senior Economist Anne Boniface said an "important catalyst" for the lift in prices was Fonterra's announcement it would reduce the amount of product on offer due to wet weather in recent weeks reducing milk collection in some regions.
The auctions are held twice a month, with the next one scheduled for Nov. 1.
The auction platform was set up by Fonterra, the world's largest dairy exporter, and is operated by trading manager CRA International.
Participants include Fonterra, Amul, Arla Foods, Arla Foods Ingredients, Dairy America, Euroserum and Murray Goulburn. Products traded on the twice-monthly auction include whole milk powder, skim milk powder, butter, cheese, and anhydrous milk fat, among others.
