22 Mar 2012

Dairy prices fall again

6:02 am on 22 March 2012

Dairy prices fell again at Fonterra's latest bi-monthly global dairy auction held overnight on Tuesday.

The dairy cooperative's Global Dairy Trade-Weighted Price Index fell 4.5% to an average selling price of $US3396 a metric tonne.

It is the fourth consecutive fall.

Last week, the dairy giant cut its forecast payout by 15 cents to between $6.75 and $6.85 a kilogram of milk solids for the current season, due to the high New Zealand dollar and an increase in milk supply globally.

Fonterra milk powder and cream general manager David Brewer says while demand's slipping, supply is holding up, as the US and European milk sectors produce more.

BNZ economist Doug Steel says as the economy improves, prices will rise and farmers will be better off.

He says in the bigger context prices are still well above 10 year averages, but it coincides with a strong New Zealand dollar which will mean less export returns than last season.

Prices slipped at the overnight auction for all products, led by a 15% fall for milk protein concentrate.