Whole Milk Powder Prices Fall to Three-Month Low at Auction, Fonterra Says
Whole milk powder auction prices fell to the lowest in more than three months, according to Fonterra Cooperative Group Ltd., the world’s largest dairy exporter.
Powder for January delivery dropped 1.7 percent from two weeks earlier, according to a trade-weighted price index calculated by the company after its latest GlobalDairyTrade auction. The average price fell to $3,463 a ton, and is the lowest for the spot contract since Aug. 3.
Fonterra accounts for about 40 percent of the global trade in butter, milk powder and cheese, selling $12 billion of product a year in 140 countries. On Nov. 5, the company reaffirmed it farmer payout forecast, saying a strengthening currency had countered a better-than-expected performance by global dairy prices.
Sustained growth in Chinese demand for dairy products will see milk powder auction prices remain stable at about $3,500 a metric ton for the rest of 2010 before “softening” in 2011, Fonterra Chief Executive Officer Andrew Ferrier said in an interview on Nov. 9.
“If there’s going to be a softening in dairy prices, it’s more likely to come in calendar 2011 driven by, for the most part, higher production out of the U.S.,” he said. “We see a scenario where U.S. production is stronger, more product hits the market and prices soften a little bit.”
Fonterra sells whole and skim milk powder and dried milk fat at its fortnightly Internet-based auctions. It offers one- month contracts with delivery starting two months after the sale, and two three-month contracts with delivery starting three and six months later.
Whole milk powder for delivery from February through April fell 2.1 percent, Fonterra said. Powder for shipment from May through July increased 3.2 percent. Across all contracts prices dropped 1.4 percent.
The winning first-contract price for regular New Zealand whole milk powder, which is the reference point for NZX Ltd.’s futures contract, rose to $3,430. The November futures contract settled yesterday at $3,500.
To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.
To contact the editor responsible for this story: Iain Wilson iwilson2@bloomberg.net
Rate this Page