Dairy prices in New Zealand remained unchanged in the fourth Global Dairy Trade auction held during the fiscal year 2016-17. Though prices have improved from a negative spot, it still remains low enough to call for a potential rate cut probability by the Reserve Bank of New Zealand.
Dairy prices remained unchanged during the GDT auction held Tuesday following a 0.4 percent decline in prices previously and prices have not increased in any of the last three auctions. Whole Milk Powder rose 1.9 percent, data released by New Zealand dairy giant Fonterra showed Tuesday.
The latest production figures suggest milk production has fallen sharply in New Zealand with a 10 percent annual decline in the year to June as volumes in South Island fell over 20 percent. In the year to May, China imported 30 percent more dairy products that in May 2015 with demand growth also strong in Latin America.
The RBNZ is expected to remain cautious on the overall trends in terms of trade. Although NZD/USD is still trading above the 0.7000 level, it is comfortably below the July highs above 0.7300, coupled with a weaker-than-expected second quarter inflation. Also, fresh controls levied by the central bank on property regulations further raise prospects of a rate cut at the Aug 10 monetary policy meeting.
At 7am GMT, NZD/USD traded at 0.7052, while it remained on the defensive following the auction result with all commodity currencies under pressure on the day as the US dollar gained widespread support.
