Dairy prices steady overnight on Fonterra auction

Dairy prices have remained steady overnight on Fonterra's monthly online-dairy auction.

Fonterra is now publishing a dairy price index, which shows the percentage change in the average price of a "basket of products' traded on its internet auction platform.

This was down 0.8 per cent after last night's trading.

The new index, known as the "gDT-TWI" (globalDairyTrade Trade Weighted Index) takes changes in the online auction price and weights them based on total international dairy product trade flows.

Paul Grave, globalDairyTrade Manager said the index was a good headline number for the state of the market.

Grave said the auction result was within an "expected range" and had helped consolidate gains made in the price of milk powder last month.

The outlook remained positive and the result reflected "both strong demand and constrained supply" in the short term, he said.

Average price achieved this morning across all contracts and contract periods for whole milk powder was US$3,932 per tonne. This was US$37 per tonne, or 1.2 per cent, lower than the April auction.

Grave said he expected prices would continue to "bounce around" moving forward, because of the potential for movement in exchange rates, supply of and demand for products and weather patterns.

The next auction will be on June 1.