Fonterra milk rally takes a breather

Last updated 10:36 03/10/2012

Relevant offers


What now for Jake the Peg - the adorable lamb with an extra leg? Agriculture left out of NZ government review of Emissions Trading Scheme Rural Hawke's Bay community's CCTV initiative helps nab thieves Endangered freshwater mussels found after Culverden stream fenced off Recommendations following coroner's court not being enforced Central Hawke's Bay dam scheme 'close' to being financially viable Fonterra chairman John Wilson: Current milk price conditional on improving market BNZ manager did not act as financial adviser: court Environment Southland keeps dairy inspection notice time minimal Fruit for Christmas despite delay in picking

Prices at Fonterra's latest online dairy auction saw modest declines overnight, with the two-and-a-half month rally on the back of the US drought taking a breather.

The GDT-TWI Price Index fell 0.9 per cent, and follows on from a 2.4 per cent gain two weeks ago. The average winning price at last night's sale was US$3285 ($3973) per metric tonne.

The GDT dairy price is closely watched by farmers as it feeds into the final price Fonterra pays its members.

Concerns over the higher New Zealand dollar and its impact on commodity prices have been building in recent months, but that has been offset to some degree by the rise in milk prices.

If those prices continue to stall, or even fall, it could have serious consequences for the rural economy with many farmers still trying to dig their way out from the high levels of debt they took on before the global financial crisis.

Fonterra recently revised its milk payout forecast range for the 2012-2013 season down 30c to $5.25 per kilogram of milksolids, from $5.50/k previously.

Mike Jones, a currency market strategist at BNZ, said it was too premature to say the rally was over.

"This looks to us like prices are taking a breather after their recent string of gains," he said. "After all, prices have now risen 20 per cent in two months."

His position is backed by recent ANZ commodity price data, which showed a 3.5 per cent gain, suggesting soft commodity prices are still fairly robust.

The New Zealand dollar recently traded at US82.74c, on par with the previous sale two weeks ago.

Six of the eight product categories recorded declines in the session, led by a 9.5 per cent drop in rennet casein, a 7.4 per cent drop in cheddar, and a 6.4 per cent fall in the key anhydrous milk fat segment.

Butter milk powder and whole milk powder rose 4 per cent and 2.8 per cent respectively.

The auction saw 164 participants out of 723 qualified bidders take part, with 139 winning bids.

Ad Feedback


Special offers
Opinion poll

Is it time for authorities to introduce tougher penalties for poaching?



Vote Result

Related story: Booby traps for poachers cost farmers

Featured Promotions

Sponsored Content

Agri e-editions

Digital editions

Read our rural publications online