China not the key driver as buyers from southeast Asia/Oceania step up.

Global dairy prices have somewhat rebounded, increasing for the first time since May.

The latest Global Dairy Trade (GDT) auction, held overnight, comes after seven straight falls in prices, which saw Fonterra cut its forecast milk price twice in a month.

At Tuesday night’s event, the GDT Index increased 2.7% to an average of US$2,888 ($4911) per tonne.

Whole milk powder (WMP), which has the biggest influence on Fonterra’s milk price, jumped 5.3% to $2702/t, while skim milk powder, which is the second reference for Fonterra, fell 1.6% to $2286/t.

Meanwhile, anhydrous milk fat increased by 2.7% to $4561/t. Butter prices increased 1.1% to $4588/t, with buttermilk powder dropping 6.5% to $2215/t.

Cheddar saw a slight decrease, down 0.6% to $4102/t.

After the last auction three weeks ago, when the index fell 7.4%, Fonterra revised its forecast to pay $6-$7.50 per kilogram of milk solids, with a midpoint of $6.75 per kgMS.

It had already slashed the forecast by 12% this month to $6.25-$7.75 per kgMS, with a midpoint of $7.00.

NZX dairy analyst Alex Winning-Browne described the “relatively significant lift” as a “sigh of relief for farmers” nationwide.

The past three weeks added a level of uncertainty to future WMP prices, having breached the $2600/t floor price it had held for five years.

Winning-Browne said the recent auction will give the market a level of certainty on that floor price.

“Interestingly, it appears China wasn’t the key driver in this lift, with southeast Asia/Oceania buyers taking out the top buyers’ spot for the first time in a while.”

She said while a lift was typically an indicator of trend, the market has yet to point in a clear direction.

“Prices have continued to bounce around, peak and trough over the last year, and with the inventory and supply story remaining supported globally and economic woes continuing to impact spending capacity, it is difficult to see a full rebound in prices in the near future.”