Dairy prices slump 5% in worst fall this year
Traded dairy products slumped 5% overnight – the biggest drop this year – on the 10th anniversary of Fonterra’s first GlobalDairyTrade auction.
The first auction, for a single product, whole milk powder, was held on July 2, 2008, just before dairy prices crashed in the global financial crisis.
Since then the price index recovered to peak in mid-2013 before slumping to an all-time low in early 2015.
Average prices in the latest auction fell to $US3232 a tonne and continued a trend over the past three auctions.
The biggest drop, of 7.3% to $US2905/t, was for the benchmark whole milk powder, which made up half the total volume sold.
Prices came under pressure as the total volume sold rose 23% to 26,519t.
Fonterra’s latest production update reported a 6.6% increase in May and it estimated 1.3% more milk would be collected in the 2018-19 season.
Production is also rising in other dairy countries, including Australia, the US and the EU.
In the latest auction, prices rose in two low-volume categories: buttermilk powder was up 6.4% to $US2480/t and rennet casein rose 3.6% to $US5089/t.
Demand for skim milk powder continued to ease, with the price falling 4.6% to $US1913/t, while anhydrous milk fat fell 1.7% to $US5937/t.
Cheddar fell 4.3% to $US3713/t and butter was down 4.0% to $US5390/t.
Lactose and sweet whey powder were not offered.
The 118 winning bids were slightly down on the previous auction. The participants fell to 152, down from 165 on June 19.
In the past 10 years, the auction has traded product worth a cumulative $US22 billion. It has some 520 registered bidders from more than 80 countries.
The next auction is on July 17.
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