Milkpowder down again at Fonterra online auction

Whole milkpowder prices continue to fall at Fonterra's internet auctions.

But the company is taking some solace from a small rise in spot prices, and from its own analysis indicating the bottom of the price cycle is near.

Fonterra's trading manager CRA International said the average price across all products and contract periods for WMP was $US2017 ($NZ3420) per tonne at the January trading event which ended at 3.39am today. The average price was 9.3 percent lower than at the December auction.

WMP prices were down 54 percent since July, within the range of decline for other dairy commodities, Fonterra said.

Spot prices were 1.3 percent above those in December.

Fonterra's GlobalTrade managing director Kelvin Wickham said dairy prices had fallen as a result of a cyclical lag between supply and demand responses.

That had been accelerated by a demand downturn resulting from the global financial crisis and recession.

"Still, the spot price increase is encouraging and we hope this is a sign of things to come," Mr Wickham said.

"Our own supply and demand analysis indicates that we are near the bottom of the price cycle. While global inventories still need to be worked through, the current price levels represent excellent buying."