Global dairy prices edge lower at NZ Fonterra auction

Thursday, 19 July 2012 00:00 - - {{hitsCtrl.values.hits}}

WELLINGTON (Reuters): International milk prices were a touch lower at the latest global auction, New Zealand’s Fonterra Cooperative Group, the world’s biggest dairy exporter, said on Wednesday.

Fonterra’s Global Dairy Trade-Trade Weighted Index, which covers a range of 30 products and contract periods on offer, fell 0.9%, with an average selling price of $2,756 per ton. It was the third consecutive auction where prices have fallen.

Prices were mixed for various products, with the largest fall seen in whole milk powder, which fell 5.8%, with smaller sized falls for cheddar, and rennet casein. But there were solid rises for butter milk powder, up 7.2%, skim milk powder, up 5.2%, and also anhydrous milk fat. The index has fallen more than 30% since hitting a near four-year peak in March last year as global commodity prices have retreated.

Full details of the auction are at: www.globaldairytrade.info

Fonterra holds two auctions a month, with the next one is on Aug 1.

In May, the co-operative cut its forecast payout for the just-ended 2011/12 season by around 4.5% to between NZ$6.45-NZ$6.55 a kg of milk solids. See It has made an initial forecast for the new season of NZ$5.95 to NZ$6.05, made up of a milk price of NZ$5.50 a kilo of milk solids and an added dividend of between 45-55 NZ cents.

Fonterra is owned by about 10,500 farmers and controls around a third of the world’s dairy exports, generating more than 7% of New Zealand’s gross domestic product.

Dairy produce makes up more than a quarter of New Zealand’s NZ$48 billion annual export earnings, and the currency is often sensitive to movements in prices.