4 Mar 2015

Milk price remains steady

2:11 pm on 4 March 2015

Recent significant gains in international dairy prices have held in the latest global dairy trade auction overnight.

The average price for the key commodity, whole milk powder, slipped by just one-percent, to US$3,241 a tonne.

But skim milk powder rose by almost 6 percent and the prices for most other products also lifted, to produce a 1.1 percent gain in the overall price index.

The quantity sold, about 22,000 tonnes, is a little under the amount traded in the previous auction a fortnight ago.

And the whole milk powder price is still sitting a little below the $3500 figure that is seen as the target for underpinning Fonterra's current forecast milk payout of $4.70 per kilo of milk solids.

The latest result comes after Fonterra indicated it would be increasing the amount of milk powders and other products it is offering on Global Dairy Trade over the next few months.

Its cut backs on earlier GDT offerings have been a factor in the price recovery seen this year.

And the revised increase comes despite Fonterra still predicting a drop in its milk supply this year.

Chairman John Wilson said last week that it was still expecting about 3 percent less milk this season.

"We're tracking fairly similar to the drought year of 2011, 2012, when it was very, very dry, so our milk production is certainly well down on last year, on a daily basis and it continues to be, because of the very dry conditions out there."

New Zealand exports of whole milk powder in January, at under 139,000 tonnes, were well down on the 191,000 tonnes exported in December and also below the amount exported in January last year.

The most striking drop has been in exports to China, which took 65 percent of whole milk power exports in January last year. This year that had fallen to 24 percent.

Get the new RNZ app

for ad-free news and current affairs