Fonterra dairy auction prices fall again

LAURA WALTERS
Last updated 07:54 06/11/2013

Relevant offers

Dairy

Owl Farm finishes season up one per cent on milk production Minimising rain inflows into ponds critical over wet winter months Dairy farm sales rise 20 per cent from a year ago Otago Regional Council's u-turn over use of 'Gypsy Day' Richard Morrison knows he has big boots to fill as new Manawatu/Rangitikei Feds president US testing begins on genetically modified ryegrass developed in NZ Children being bullied because their parents are dairy farmers - DairyNZ Celebrate payout lift but farmers warned to keep control of spending Horowhenua politician, farmer and community man greatly missed Farming family marks 154 years

A second consecutive drop in the price of products at last night's Fonterra commodity auction could signal global dairy supply is on the rise.

The GlobalDairyTrade's trade-weighted price index overnight dropped 1.8 per cent compared with the last sale.

The average winning price was down to US$4797 ($5781) a tonne from US$4888 a tonne.

Maximum supply, the measure of how much product Fonterra has for sale, rose to 51,874 tonnes from 45,556, with a total of 49,304 sold.

BNZ currency strategist Mike Jones said the drop was likely to reflect an improving global milk supply.

A rise in global dairy supply had been anticipated for some time and the drop in prices at last night's auction was the first sign this was happening, he said.

"It's a result that's very much within the bounds of expectations."

However, New Zealand dairy commodity prices were still 41 per cent higher than they were a year ago, Jones said.

The most recent drops in dairy prices would not have an effect on the Fonterra payout, he said.

Prices would have to fall by at least 10 per cent before anyone started to panic, he said, adding that markets expected prices to hold up rather than collapse.

Whole milk powder fell 3.7 per cent.

Jones said this was likely to have had an effect on the overall drop in the dairy commodity price index as whole milk powder was the largest category by volume.

In the latest auction two of the nine product categories fell.

Butter led the decliners down 7 per cent compared with the last sale.

Anhydrous milk fat was up 6.9 per cent and milk protein concentrate gained 4.6 per cent.

In last night's auction 199 bidders took part, with 129 winning bidders, and 820 qualified to bid.

Ad Feedback

- Stuff

Special offers

Featured Promotions

Sponsored Content