The over average price rise for goods traded overnight was 3.4%.
Ahead of the auction WMP April futures were trading at $US1960, indicating a rise of just 1.5% could be expected.
The auction results lifted AgriHQ farmgate milk price forecast for this season by three cents to $4.09/kg MS. Fonterra’s forecast is $3.90/kg MS.
That lift was also driven by a rise in dairy commodity futures trading on the NZX.
AgriHQ forecasts now indicated a small lift in the farmgate milk price for next season. The AgriHQ 2016-17 Farmgate Milk Price now stands at $4.45/kg MS.
However, if the New Zealand dollar remains strong it will erode returns for next season.
“The higher milk price forecast for next season is primarily driven by the expectation that dairy commodity prices will continue to rise in the coming months,” Kilsby said.
“Based on NZX Dairy Futures prices our expectation is that the WMP price will reach US$2450/t by January.”
Regular grade WMP supplied by Fonterra traded at US$2075/t at last night’s auction, however, higher prices were paid for the later dated contracts which resulted in the WMP price index lifting 7.5%.
The number of participating bidders was identical to the previous auction but slightly fewer bidders were successful in buying products. The auction was completed in less than two hours.
The volume of product available was relatively low with just 9225t of WMP on offer.
“The lower volumes on offer helped to support WMP prices but prices for skim milk powder are still weak due to the large quantities of this product being produced in the European market.
“WMP is less influenced by the European market as most of the extra milk in that market is going into SMP and butter.
“But if WMP prices continue to improve then European processors are likely to produce more WMP,” Kilsby said.
The rennet casein index was also up 7.5% while lactose made the largest gain at 8%.
Gains in the milk fat products were more modest. The anhydrous milk fat index gained 1.6% while butter was up 2%. Cheddar was the only product to fall in price with the cheddar index dropping 3.9%.
