Volatility 'new norm' in dairy

It is not yet known how the sharp drop in prices at yesterday's GlobalDairyTrade auction will affect South Canterbury dairy farmers.

The Global Dairy Auction, run by Fonterra every two weeks, had its fourth decrease of 4.9 per cent or greater in the past five auctions.

Fonterra chief financial officer Lukas Paravicini said the latest fall would not affect the farmgate price farmers received.

Volatility in the dairy industry is the new norm so it would not be feasible to react on the most recent auction results alone, he said.

"Fonterra's board takes a long-term view when calculating the forecast farmgate milk price.

"Global dairy auction prices are one of the criteria the co-op looks at when determining the forecast.

"If market conditions change the board's view, we will update the market," Paravicini said.

The Timaru Herald