Fonterra sits tight on milk prices

ANDREA FOX
Last updated 11:19 03/04/2013

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Fonterra says it is "sitting tight" on the prices of New Zealand retail market fresh milk and dairy products despite another big surge in global commodity dairy prices overnight.

The average price on Fonterra's Global Dairy Trade overnight auction soared 14.2 per cent on the last sale as world buyers continued to anticipate a shortage of product because of continuing drought in New Zealand.

It was the eighth-straight gain in average price and the third-consecutive auction with double-digit price gains.

But Fonterra Brands managing director Peter McClure said there were no immediate plans for the dairy giant's New Zealand consumer products arm to raise its prices.

"Only small volumes (of product) goes on GDT but sure, it is an indicator," he said.

"But we are watching and waiting."

Fonterra Brands has to buy its milk from the parent Fonterra company at world prices. Fonterra collects 90 per cent of all milk in New Zealand and dominates the wholesale supply market to other processors and manufacturers.

The retail dairy market is dominated by Fonterra Brands and Goodman Fielder, which also buys its milk for manufacturing from Fonterra.

McClure said his business would review prices when Fonterra's board of directors made its next announcement about the milk payout to farmers.

Fonterra last week raised its milk payout forecast by 30 cents a kilogram milksolids to $5.80. Prior to that announcement, McClure had said he would review domestic pricing when the next payout forecast was given by the board.

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- BusinessDay.co.nz

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