Prices at Fonterra’s Global Dairy Trade (GDT) are set to rise again at tomorrow’s auction.

According to latest futures market trading, prices at the auction could rise by as much as 10% with whole milk powder prices set for a 15% increase, according to one analysis.

One factor that may be impacting positively on the dairy sector is Fonterra’s signal last week that milk production in New Zealand might be lower than expected for the coming season.

[yes-app]futures tweet[/yes-app]

Last week, Fonterra maintained its milk volume forecast for the 2015-16 season in the range of 2-3% lower than the amount collected last season but hinted that it could fall further.

Miles Hurrell, Group Director Co-operative Affairs, said although Fonterra had forecast a 2-3% decline in volumes there was evidence that farmers were pulling back on production.

Dairy product prices rose at the most recent Fonterra Global Dairy Trade auction on September 1.

The event represented the second positive auction for prices in a row after prices rose last month for the first time since March 2015 after 10 negative auctions.

Average prices paid at the latest Global Dairy Trade auction rose 10.9% on the last event held two weeks previously which itself was up 14.3%.

Irish milk prices

Lakeland Dairies has cut its August milk price by 0.75c/L to 26.25c/L after the co-ops board met last week.

This latest cut follows a cut of 1c/L for July milk and another 0.75c/L cut for June milk.

Lakeland is the first co-op to announce an August price for milk and it comes after most processors cut their July milk price.

According to the latest figures from the Milk Market Observatory (MMO), milk prices are set to fall again for August returns.

The average farmgate milk price across the EU has fallen over 20% in the last 12 months and the latest MMO statistics suggest that it will fall a further 1.3% for August supplies.