Dairy auction prices continue downward trend

NIKO KLOETEN
Last updated 08:47 21/05/2014

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Dairy prices fell 1.8 per cent at the global dairy auction overnight, continuing a three-month decline that has seen prices cut by more than 20 per cent.

Prices at the fortnightly GlobalDairyTrade auction have now fallen for seven straight auctions, with the trade-weighted price index down 22.5 per cent since its peak on February 4.

The average winning price was US$3873 (NZ$4516) a tonne, down from US$3950 at the previous auction and down US$1169 (23.2 per cent) from US$5042 a tonne on February 4.

The price drop was bigger than the last auction when prices fell 1.1 per cent, prompting some economists to predict prices would flatten after some big falls.

Prices are now at their lowest level since February last year.

Maximum supply, the measure of how much product is for sale, dropped to 34,328 tonnes from 39,220 tonnes last auction, with 33,677 tonnes sold. The price of skim milk powder, the largest category by volume, fell 3.5 per cent, while the price of butter declined by 3.8 per cent.

Cheddar (down 2.1 per cent) and butter milk powder (down 1.9 per cent) also fell.

Rennet casein (up 4.6 per cent) and anhydrous milk fat (up 1.9 per cent) bucked the overall downward trend.

The GlobalDairyTrade auction platform is managed by Fonterra, which accounts for about 90 per cent of the products sold at the auctions.

Fonterra is forecasting a farm-gate milk price of $8.65 per kilogram of milk solids for the current season.

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