Dairy commodity prices soar again, but still below 07/08 highs

The picture for New Zealand's dairy industry keeps getting better, with the latest international dairy price figures released by the US Department of Agriculture (USDA) overnight showing export prices rose again this week to levels not seen in over a year. USDA figures for dairy exports from Oceania show average prices for butter, skim and whole milk powder, and cheddar cheese are up by between 32% to 54% from their 2009 lows in US dollar terms. There is also strength in New Zealand dollar terms, with prices up by between 9% and 30% for New Zealand's most significant export commodities. However, despite the recent strength in prices, there is still a way to go until the prices reach their historic highs over the last three years. In US dollar terms prices are between 38% and 51% below their highs, while in NZ dollar terms prices are still between 35% and 52% below their highs. Whole milk powder prices have had the biggest rise of the four commodities, up 54% from their low in February to an average price of US$3,500 per tonne. The price in New Zealand dollars corresponds to NZ$4,734/t, which is up 30% from its low in July. The NZ dollar price has not been this high since the last week of October 2008, with the latest price rise coming on the back of a hike in Fonterra's 2009/10 payout price from NZ$5.10/kg to NZ$6.05 earlier this week. The rise in the whole milk powder price has been trumpeted by the recent Fonterra internet auctions at which the average whole milk powder price has risen 88% in US dollar terms since its July low. Fonterra said that in the last financial year the online auction accounted for about 10% of the dairy giant's sales. Butter prices have had the next biggest rise over the year and are up 47% from April in US dollar terms to US$3,625/t. In New Zealand dollar terms prices are up 25% from their low in June and haven't been this high since late November 2008. Skim milk powder prices are now up 44% in US dollar terms since February and 16% in NZ dollar terms since August. Cheddar cheese prices have risen by the least of the four since their lows, but are back to levels not seen since October last year in US dollar prices. Prices are up 32% in US dollar terms since April to US$3,875/t, while prices in New Zealand dollar terms are up 9% since August.