4 Nov 2015

Dairy prices fall at latest auction

10:54 am on 4 November 2015

Prices have taken another dive in the latest Global Dairy Trade auction.

In the the second consecutive fall, prices dropped 7.4 percent in the overnight auction to $US2,569 a tonne.

Whole milk powder, the key commodity underpinning Fonterra's farmgate milk price, fell 8 percent to $US2453 a tonne.

Fonterra is due to review the farmgate milk price , currently at $4.60 per kilo of milk solids, on 27 November.

All other products traded at last night's auction fell by between 4 percent and 11 percent. The volume for sale was lower than the last auction a fortnight ago.

The price had been expected to fall but AgriHQ analyst Susan Kilsby said the overall drop was bigger than expected.

Dairy prices had risen in four consecutive auctions between August and October, leaving farmers cautiously optimistic the recovery had begun. However Ms Kilsby said there was very flat outlook for dairy commodities through to the end of this season.

Jacqueline Rowarth, agri-business professor at the University of Waikato, said the global picture was extremely hard to interpret, particularly with China wanting to keep New Zealand on its toes.

She said farmers may need to think more about premium markets and added value products.

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