Dairy product prices slumped to the lowest level since October 2012 in the latest GlobalDairyTrade auction, paced by whole milk powder and cheddar.
Since the last auction three weeks ago, Fonterra Co-operative Group [NZX: FCG] has slashed its forecast 2015 farmgate milk payout to $6 per kilogram of milk solids from $7 kg/MS, citing strong global production, a build-up of inventory in China and falling demand in emerging markets. The ANZ Commodity Price Index fell for a fifth month in July, led by a 12 percent drop in whole milk powder.
The GDT price index dropped 8.4 percent to US$3,025 a tonne, down from US$3,309 a tonne three weeks ago. Some 48,380 tonnes of product was sold, up from 36,656 tonnes three weeks ago.
In the latest GDT auction, whole milk powder shed 11.5 percent to US$2,725 a tonne, while cheddar dropped 10.2 percent to US$3,742 a tonne.
Butter milk powder sank 10.1 percent to US$3,852 a tonne, and butter declined 9.6 percent to US$2,800 a tonne.
Skim milk powder fell 6.5 percent to US$3,264 a tonne, while rennet casein slipped 0.7 percent to US$9,701 a tonne.
Anhydrous milk fat jumped 6.0 percent to US$3,457.
Neither lactose nor milk protein concentrate were offered at the event.
The New Zealand dollar was trading at 84.76 US cents before the release. It dropped as low as 84.52 cents and was recently trading at 84.59 cents.
There were 153 winning bidders out of 178 participating bidders at the 11-round auction. The number of qualified bidders rose to 668 from 663 at the last auction.
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