In its latest auction on 18 August GlobalDairyTrade saw the average price for all dairy products increased by 14,8% compared with prices achieved at the previous sale held at the beginning of August, according to statement by the Milk Producers Organisation (MPO).
This is the first increase since dairy prices started decreasing in March 2015.
Prices increased for all dairy products, with the exception of buttermilk powder and lactose. Full cream milk powder sold at 19,1% more, skimmed milk powder at 8,5% higher and butter prices increased by 10,8%, the MPO said.
The increase in prices may be an early indicator that the market expected lower producer prices to impact negatively on production growth in coming months, said the release.
Despite the increase in trade prices, there has been a drop in the farm-gate price for milk for South African producers..
According to Dr Chris van Dijk, chairperson of the MPO, favourable farm-gate milk and feed prices in 2014, combined with good climatic conditions in coastal production areas led to national production growth.
“To compound overproduction, an additional 89 million litres of milk equivalent was imported in the first six months of 2015. Higher production and imports caused farm-gate milk prices to fall drastically,” Van Dijk said.
