Wednesday 3rd December 2008
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Milk powder for February delivery, Fonterra's nearest contract, fell 15% to US$2,078 a tone in this week's auction, the lowest since September 2006, according to results posted on its globalDairyTrade website. The March contract also fell 15% to US$2,284.
Fonterra last month cut its forecast payment to farmers after a 24% slide in global prices for dairy products in the past eight weeks and the prospects of a write-off of its stake in disgraced Chinese dairy company San Lu.
The revised forecast is for $6 a kilogram of milk solids for the 2008/2009 season, down 60 cents from the previous estimate in September.
Dairy prices have joined a broad downturn in commodities on speculation the slowing global economy needs less raw materials, fuel and food. Crude oil for January delivery fell 4.7% to US$46.96 a barrel on the New York Mercantile Exchange yesterday, the lowest since May 2005.
The dairy co-op doesn't expect a pick up until later next year.
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