Milk Powder Auction Prices Decline for First Time This Year

Whole milk powder fell for the first time this year amid signs that New Zealand’s most widespread drought in at least 30 years may ease, according to Fonterra Cooperative Group Ltd.

Powder for July delivery declined 4.8 percent, according to a trade-weighted index on the company’s GlobalDairyTrade website. It was the first fall since Dec. 18. The near-term contract for New Zealand product fell to $6,001 a metric ton from a record $6,283 on April 16.

Prices have surged 89 percent since Jan. 2 as a drought declared across the entire North Island including Waikato province, the country’s biggest milk producer, curbed milk collection. The nation may receive near-normal rainfall through June, the National Institute of Water and Atmospheric Research said last month.

Fonterra on March 27 raised its forecast payout to farmers for the current season citing rising global demand at a time of restrained supply. Milk collection in March fell 16 percent from a year earlier, the Auckland-based company said April 11.

Fonterra, which accounts for about a third of the global trade in dairy products, sells whole, skim and butter-milk powder, dried-milk fat, lactose, butter, cheese and casein at its GlobalDairyTrade auctions. The company offers monthly contracts with delivery starting from two months after the sale. Casein is a protein found in milk.

Whole-milk powder for August delivery fell 8.8 percent while prices across all five product contracts out to November dropped 10.2 percent, Fonterra said.

In other auctions, prices for July delivery of milk fat, casein, cheddar, skim and butter-milk powder also declined. Cheddar rose, while lactose and milk protein concentrate weren’t offered.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

To contact the editor responsible for this story: Edward Johnson at ejohnson28@bloomberg.net

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