Fonterra milk powder prices unexpectedly rise, long-term
contracts weaken
By Paul McBeth
March 3
(BusinessWire) - The price of whole milk powder
unexpectedly rose this month in Fonterra Cooperative
Group's online trading auction, though long-term contracts
were weaker, hinting that the slight gain may be a blip.
The average price for whole milk powder rose 0.8% to
US$3,281 a tonne, according to the globalDairyTrade website
managed by CRA International, that's 79% higher than the
low in July. Still, prices for the third contract, when
powder between September and November this year, fell 2.5%
to US$3,204 a tonne.
"The difference between short-term
contracts rising and long-term contracts falling was
interesting," said Doug Steel, economist at Bank of New
Zealand. "Prices aren't going to tear away upwards any
time soon."
The gain in whole milk powder was the first
this year after a 1.6% fall last month and dropped 7% in
January. Dairy prices fell 7.6% last month, according to the
ANZ Commodity Price Index, after they surged last year and
underpinned the series' performance.
Steel said it's
too early to say whether the gain in whole milk powder this
month is indicative of a longer trend, though it does damp
some of the downward pressure ahead of the Northern
Hemisphere boosting production.
Paul Grave,
globalDairyTrade manager, said the result was pleasing,
though there's still an "element of uncertainty as to
how supply and demand factors will influence prices over the
coming months."
The average price of anhydrous milk fat
fell 5.4% to US$3,959 per tonne, its lowest price since
Fonterra first started offering it on the platform in
February.
The event included skim milk powder for the
first time, which sold at an average price of US$2,927.
New Zealand's dairy exports declined in 12 months
through January, with milk powder, butter and cheese sliding
12% to $8.12 billion, while casein and caseinates sank 27%
to $751 million.
Dairy products account for about 22% of
the country's annual $39.7 billion worth of
exports.
(BusinessWire)