Milk powder price snaps two-month gain at Fonterra auction

Wednesday 13th May 2009

The price of milk powder fell 4.1% in Fonterra Cooperative Group’s online auction, the first decline after two months of gains, suggesting the recovery in global prices may be at a more sedate pace.

The average price of milk powder fell to US$2,144 per metric ton, according to results posted on the GlobalDairyTrade website, down from US$2,235 last month.

“In this new environment we’re likely to see bigger shifts than we have in the past,” said Kevin Wilson, a rural economist at ANZ National Bank. A fall of 4% in a month “isn’t cause for undue optimism or pessimism. We’re at a point of stabilization in the market and looking for some slow improvement.”

Fonterra Cooperative Group, the world’s biggest exporter of dairy products, last month raised its payout to farmers by 10 cents to $5.20 per kilogram of milksolids, still down from last season's record $7.90 payout. The cooperative said there were “some encouraging signs of more stability” in global dairy prices.

In its Financial Stability Report, the Reserve Bank said agricultural debt was expected to rise as commodity prices declined. The revision in the Fonterra payout to $5.20 per kilogram was approximately the long-term average, and constitutes a significant reduction in budgeted farm revenue, according to the statement today.

In the latest milk powder auction, prices rose for the nearest contract, for June delivery, up 1.6% to US$2,168 a ton, while powder for delivery in August through October fell 6.9% to US$2,162 and for November-January 2010 prices slipped 6.3% to US$2,113.

Businesswire.co.nz

Comments from our readers

No comments yet