Milkpowder price up 26 pc in auction

Prices in Fonterra's monthly online milk powder auction jumped almost 26 percent with the dairy co-operative pointing to strengthening demand in albeit volatile global markets.

Fonterra said today the average August price achieved across all contracts and contract periods for whole milk powder was US$2,301 per tonne. This was US$472 per tonne higher than in Fonterra's July auction. Prices ranged from US$2,235 per tonne to US$2,530 per tonne. Overall average prices rose 25.8 percent.

Nigel Kuzemko, the commercial and strategic director for Fonterra trade and operations, said the higher prices reflected a recent firming in market sentiment. However, the international dairy market remained volatile with supply and demand going through a rebalancing phase.

"We are seeing signs of strengthening demand and prices, and that's encouraging, but the market remains dynamic with trends difficult to forecast," said Kuzemko.

The August auction included 1,000 tonnes of whole milk powder from Fonterra's Australian operations for the first time.

Fonterra is forecasting a $4.55 per kilogram of milk solids payout for its farmer shareholders for the 2009/10 dairy season. It expects to pay $5.20 per kilogram for the 2008/09 season with the final figure to be confirmed in September.

Fonterra's next monthly online auction will be held on September 1.

- © Fairfax NZ News