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Average milk powder price falls at Fonterra auction
The average price for all whole milk powder products sold during Fonterra's May internet auction fell 4.1% from the previous auction a month ago, after improving in March and April. The average price of US$2,144/tonne was 51.2% below its peak in July last year when the auctions began. "Today's result confirms our expectation that dairy markets will be characterised by increased uncertainty in the future and we expect prices will continue to cycle around current levels," Fonterra Global Trade Portfolio Optimisation Director Nigel Kuzemko said. "Still, globalDairyTrade continues to achieve its goal of being an accepted reference point for global dairy prices, with last night's trading event attracting strong international interest and a record number of participants," Kuzemko said. Despite the overall fall, the average price for milk powder shipments to be sent from New Zealand in the first contract period (July in this case) was up 1.6% from April at US$2,168/tonne. This was the third consecutive month, and fourth in five months, that the average price for initial shipments following the auction rose, reaching a six month high, 42% below its peak in July. However, the average price for milk powder shipments in the second contract period, in this case shipments from New Zealand in August to October, fell 6.9% from April, to US$2,162/tonne. The contract period 2 price had risen in March and April but fell back to being 46% below its July peak.
The average price in contract period 3 (shipments made between November and January) also fell, by 6.3% from April to US$2,113/tonne. It fell back to sitting 44% below its peak. There were 4,000 tonnes of milk powder offered for the July shipments; 5,000 tonnes for the August-October shipments; and 6,000 tonnes for the November-January shipments. Between the April and May auctions, the New Zealand dollar rose about 7% from 56 USc on April 1 to 60 USc on May 12. In New Zealand dollar terms, the average price fell about 9% between the two auctions.
Alex At the last auction,
Alex
At the last auction, Fonterra's spokesman said that the 2% rise in auction prices represented the bottom of the market and a turning point in the market. He appears to be wrong. Perhaps you should look him up and ask what is happening now and does he have a clue whats really happening or is he just guessing like the rest of us. Then we get a massive forced sale to china of 160,000 tonnes most of which we apparently never had in storage, sorry but credibility is getting stretched here.
If you wish I can give, what I think is a pretty good guess where this is going to end up. Im not being paid a cent,but will take whats offered, especially now my wife is hinting that its time i got a proper Job. Still not sure what that is exactly. May catch up next time you are filling up your car.
Farm prices appear to be
Farm prices appear to be in freefall:
http://www.stuff.co.nz/business/2412373/Rural-properties-take-a-dive
I for one would be
I for one would be interested in what you think is going to happen.
I found the agprodecon.org analysis http://www.agprodecon.org/node/29 particularly interesting, if the analysis splitting farms into debt pr kg of milk solids is correct (I have a suspicion that the higher geared farms have higher EBIT per kg/ms, but not enough to make the analysis incorrect.
Some farmers, and by extension banks and equipment lenders, must be feeling very exposed...
http://www.interest.co.nz/ratesblog/index.php/2009/05/14/farm-sa
http://www.interest.co.nz/ratesblog/index.php/2009/05/14/farm-sales-weak...
While recessions and depressions are
While recessions and depressions are devastating to many, they are also great opportunities to purchase depressed assets at bargain basement prices. Argentina is an example where a recession, coupled with a large national debt, allowed European multinationals to buy up that nation's communications network, utilities companies, and oil industry.
The Fonterra Board has been stymied in their goal to take the co-operative public and plans another shot this summer. Farmer solidarity is strong enough to stalemate the van der Heyden plan during a normal economic cycle, but farm debt and tight credit have weakened the farmers. Frankly, the Fonterra Board is holding all the face cards in the coming battle.
This is how I see it breaking down:
The projected $5.20 payout will be reduced. Either that, or Fonterra will float another bond issue to maintain it. Bonds will provide a better return than equities for the next few years. Regardless of what happens, a bond for equity swap sometime down the road will be a dream ISO.
Does anyone else wish they knew what was discussed in China during the China trip? China offers to buy Fonterra, and Key says no,no. Does the prospect of Asian ownership make the prospect of western ownership more palatable to the Kiwi farmer?