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Dairy product prices decline to lowest since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder.

The auction results come after New Zealand commodity prices fell to a 17-month low in August, based on the ANZ Commodity Price Index, with whole milk powder down 15 percent.

Yet Fonterra [NZX: FCG] last week announced plans to ramp up milk powder production in New Zealand, while licensing its Anmum brand of infant formula to a Chinese partner, a sign it is upbeat about longer-term demand.

The GDT price index dropped 6.0 percent to US$2,787, down from US$3,000 two weeks ago. Some 57,010 tonnes of product was sold, up from 46,387 tonnes two weeks ago.

In the latest GDT auction, rennet casein sank 14.3 percent to US$8,232 a tonne, while butter milk powder shed 12.9 percent to US$3,174 per tonne.

Skim milk powder dropped 9.5 percent to US$2,600 a tonne, anhydrous milk fat slid 5.8 percent to US$3,360 a tonne, and butter gave up 5.6 percent to US$2,753 a tonne.

Cheddar fell 4.9 percent to US$3,275 a tonne, while whole milk powder declined 4.3 percent to US$2,673 a tonne

Neither lactose nor sweet whey powder were offered at the event.

The New Zealand dollar recently traded at 83.09 US cents, after dipping as low as 82.92 before the release.

There were 158 winning bidders out of 184 participating bidders at the 10-round auction. The number of qualified bidders rose to 660, from 650 at the last auction.


Comments and questions

Most money NZ received from historically high export prices was not invested into productive areas that create jobs
Instead it was "invested" in Auckland's inflated real estate with the encouragement of the Government with their tax policies.
In 12 month's we will be much worse off than Australia when China reduced mineral imports.
NZ is now living in a "fools paradise" and we cannot see the elephant in the room.

Another anonymous commentator who is trotting out the cliched phrase that tax policy favours property investment over the "productive sector".
Tell me why anon ??
When considered against the wideranging PIE funds who (are supposedly invested in the productive sector and can pass income out to their investors at 28% and capital gains tax free, how does a property investor enjoy a preference ??


Should be some cheap milk in the shops soon then?

After years of being told that dairy prices in NZ are linked to what they can sell for overseas, I can't wait to see the drop in price here!

Or more likely we will get a different excuse.

Perhaps that they now need to top up the new lower prices using the NZ market perhaps.

In 2013 Beingmate ... Net profit was about $140m, ... "Historical data put sales at $5b in 2008, equating to more than 250 per cent growth over the past five to six years ... OK then. So Fonterra has checked its slider grommets.
- It better had. The purchase is being funded from Fonterra's existing cash and debt facilities. ... Craigs Investment Partners see Fonterra's balance sheet as limiting its international expansion. With just a 20 per cent stake, "Fonterra has neither control over the direction of Beingmate or over its cash flows ... they said. ... Fonterra's leap is looking even bolder than Chalkie thought ...