7 Jan 2009

Milk powder drop no surprise to Federated Farmers

9:04 pm on 7 January 2009

Federated Farmers says it is disappointed but not surprised by the latest fall in the price of whole milk powder.

The price at Fonterra's January online auction was 9.3% lower than in December.

Whole milk powder prices have fallen 54% since July, but Fonterra says its analysis of supply and demand suggests the price cycle is nearing the bottom.

Fonterra spokesperson Kelvin Wickham says the fall is the result of a lag between supply and demand, and the global financial crisis.

However, Mr Wickham says a 1.3% rise in spot prices for whole milk powder since December is encouraging, and a sign that prices overall should begin to pick up again.

Even so, he says it could be some time before the decline in dairy commodity prices is passed on to consumers.

But Federated Farmers spokesperson Lachlan McKenzie says dairy farmers are not optimistic prices will improve in a hurry.