5 Oct 2016

Drop in global dairy prices

10:35 am on 5 October 2016

Global dairy prices have fallen in the overnight auction, with the average price dropping 3 percent to $US2880 a tonne.

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Photo: RNZ / Cosmo Kentish-Barnes

The price drop is the first since July, following a series of strong rises.

The whole-milk powder price fell nearly 4 percent to $US2681.

That price helps determine Fonterra's forecast payout to farmers, which was raised a couple weeks ago to $5.25 a kilo of milk solids for the current season.

The dairy co-operative has warned there will continue to be volatility in the dairy sector.

But Fonterra chairman John Wilson said the trend was still towards prices lifting, with production continuing to decline in most of the key dairy-producing regions around the world.

He said until the price reached about $US3000 a tonne - which is generally when farms start becoming profitable - there would not a rise in production.

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Photo: globaldairytrade.info

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