Fonterra milk prices ease slightly

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New Zealand's Fonterra Cooperative Group, the world's biggest dairy exporter, said international milk prices eased slightly at its latest auction, although the outlook for prices remained positive.

Fonterra said its Global Dairy Trade-trade weighted index at its latest internet auction fell 0.8 percent.

Fonterra has introduced the index for the May auction to better reflect the range of 30 products and contract periods on offer at its monthly event.

Meanwhile the average selling price for whole milk powder, Fonterra's measure of benchmark pricing at previous auctions, was $US3932 ($NZ5463) a metric tonne, down $US37 per tonne or 1.2 percent, on a month ago.

Whole milk powder prices have more than doubled since hitting a low of $US1829 a tonne last July, although the prices have been relatively stable over the past few months. Fonterra said despite prices slipping in the latest auction the market remained characterised by strong demand and constrained supply.

The next auction will be held on June 1. Last week Fonterra lifted its forecast payment to farmers to $6.10 a kilogram of milk solids in the 2009/10 season, from a previous $5.70, with a dividend of 40-50c a share.

At the time Fonterra said dairy prices had remained relatively high and more stable than expected for several months. A drought is affecting some parts of New Zealand, which Fonterra has said will mean it misses its forecast growth milk production this season.

- Reuters