Prices may drop for third straight global dairy auction

AgriHQ senior dairy analyst Susan Kilsby

Related Audio: NBR's Fiona Rotherham previews this week's Fonterra results (Mar 20)

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Prices on the GlobalDairyTrade platform may drop for a third straight auction tonight as supply outstrips demand.

Futures trading on the NZX this morning indicated whole milk powder prices will slip 3%, skim milk powder will drop 6% and milkfat products such as butter and anhydrous milk fat will decline between 2 and 3%, according to AgriHQ senior dairy analyst Susan Kilsby.

Fonterra Cooperative Group, the world's largest dairy exporter, earlier this month announced it would lift the volume of whole milk powder and skim milk powder offered in coming auctions on the GDT platform by about 25,000 tonnes as more favourable weather meant it collected more milk than expected from its farmer suppliers.

"We did see some gain in whole milk powder prices last week but since Friday the future market has eased back," Ms Kilsby said. "There is nearly 10% more whole milk powder available at this auction than the previous event so it will be a challenge for the market to absorb this extra volume without some slippage in price."

Dairy products are New Zealand's largest commodity export, worth $11.25 billion in the year ended Jan. 31, according to the latest trade data from Statistics New Zealand.


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2 Comments & Questions

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10 year median price says we're at/just below the long term average for the Price Index. Hopefully we can see stabilisation in prices here so that we do not have to repeat the boom/bust cycle ad infinitum.

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If I was a farmer I'd be getting out of the milk business. Why slave away just to make the head boys at Fonterra rich.

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