(Adds detail from auction, comment from analyst, background)
WELLINGTON, July 20 (Reuters) - International milk prices were mixed in this month’s second Global Dairy Trade auction as a gain in whole milk powder offset falls in other prices.
The GDT Price Index, which covers a variety of products and contract periods, remained flat, with an average selling price of $2,336 per tonne, in the auction held on Tuesday.
Whole milk powder prices, which make up the bulk of the auction, rose 1.9 percent, while skim milk powder prices fell 1.1 percent and butter fell 5.0 percent.
AgriHQ dairy analyst Susan Kilsby said there may be more improvement to come.
Until recently, dairy was the backbone of New Zealand's economy, representing around 25 percent of exports. But dairy prices have dropped sharply from their record highs in 2013, due to China's economic slowdown and global oversupply.
Sliding prices have put the country's farmers under pressure, with more than 85 percent estimated to be operating below breakeven levels.
Overall, global milk supply "may slow down a little quicker than previously anticipated" as the European Commission provides additional aid for its farmers, said Kilsby. Any slowdown is likely to support prices and would be good news for dairy farmers.
The auctions are held twice a month, with the next one scheduled for August 2.
The auction platform was set up by Fonterra, the world's largest dairy exporter, and is operated by trading manager CRA International.
Participants include Fonterra, Amul, Arla Foods, Arla Foods Ingredients, Dairy America, Euroserum and Murray Goulburn. Products traded on the twice-monthly auction include whole milk powder, skim milk powder, butter, cheese, and anhydrous milk fat, among others.
