2 May 2013

Dairy auction prices down

11:40 am on 2 May 2013

Global dairy prices have fallen for the first time in nearly five months and volumes have rebounded since drought struck the North Island at the beginning of the year.

The average winning price at Fonterra's fortnightly auction, has fallen 7.3% to $US4597 per metric tonne.

It was the first price decline in the auctions since early December, and followed a 0.6% rise in the previous sale.

Whole milk powder experienced the biggest drop, falling 10.2%, skimmed milk powder was down 9.5% and butter down 6.7%.

However, volumes rose 15% to more than 17,000 tonnes, after recent constraints due to a drought throughout the North Island.

Bank of New Zealand economist Doug Steel said the drop in the average price is not a surprise given the strength of previous auctions, so the market has corrected itself. And while volumes were up, this was forecast.

He said prices will still remain elevated with a tight global supply and continued demand, particularly from China.

Another entrant

India is to join the Global Dairy Trade too.

As of June, Amul, India's largest brand, will begin selling whole milk and skim milk powders at the auction - joining Fonterra, Dairy America, Murray Goulburn of Australia and Arla of Europe.