The price of whole milk powder jumped 24.2% in Fonterra's latest monthly internet auction, with the weighted average price of US$2,858 per tonne bringing the price back to a level not seen since October 2008. (Update 1 includes Fonterra comments.) Fonterra Global Trade Managing Director Kevin Wickham said the lift in prices was higher than expected. "However, we anticipated whole milk powder prices would lead the recovery because of low global inventories and firming demand," Wickham said. The inclusion of 2,000 tonnes of whole milk powder from Australia in the auction (up from 1,000 tonnes in August) had little downward impact on prices. New Zealand quantities of 19,000 tonnes were the same as in August and July.
"With demand returning, our customers have more confidence in refilling their supply chains. But it remains to be seen whether demand has returned to sustainable growth," Wickham said. The 24.2% price jump in September was on the back of a 25% jump in August after the average price had hit a record low of US$1,829 in July. Fonterra began the internet auctions in July 2008, with an opening average sale price of US$4,395 per tonne. Wickham said that from November 3, the auctions would include anhydrous milk fat (AMF), which was in line with Fonterra's plans to offer an expanded range of products to be sold via the web-based auctions. "This will provide for AMF the same transparent market price that globalDairyTrade is already providing for WMP," he said. The next auction will be held on October 6.
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