Post RSS Feed 
Podcast Feed
Wholesale milk powder price jumps 26% in Fonterra auction; Kiwi$ jumps (Update 1)
August 5th, 2009
The average price of wholesale milk powder in Fonterra’s internet auction for August was US$2,301, up 26% from July’s price, said internet auction firm globalDairy Trade. (Update 1 with currency reaction.)
Ironically, the result pushed the Kiwi dollar up half a US cent above fresh highs to over 67 US cents.
“We are seeing signs of strengthening demand and prices, and that’s encouraging, but the market remains dynamic with trends difficult to forecast,” said Nigel Kuzemko, Director Commercial and Strategy, Fonterra Trade and Operations.
The August trading event this morning (NZT) for Fonterra’s internet-based sales platform, globalDairyTrade, saw average prices for Whole Milk Powder rise 25.8%.
The trading manager, CRA International, advised Fonterra that the average price achieved across all contracts and contract periods for Whole Milk Powder (WMP) was US$2,301 per tonne FAS. This was US$472 per tonne higher than the July event. Prices ranged from US$2,235 per tonne FAS to US$2,530 per tonne FAS.
The August trading event included for the first time 1,000 tonnes of WMP from Fonterra’s Australian operations.
Nigel Kuzemko, Director Commercial and Strategy, Fonterra Trade and Operations, said it was encouraging to see improved pricing which reflects a recent firming in market sentiment. The international dairy market remains volatile – with supply and demand going through a rebalancing phase.
“We are seeing signs of strengthening demand and prices, and that’s encouraging, but the market remains dynamic with trends difficult to forecast.”
The inclusion of Australian product in this month’s event was in line with Fonterra’s objective to expand the range of products sold on globalDairyTrade.
Mr Kuzemko said: “This will bring the same market price transparency for Australian product that globalDairyTrade trading events have established for New Zealand product. Ultimately this is about providing greater choice for our customers and, in today’s volatile market, ensuring the best returns for our farmers.”
Tags: Dairying, Farming, Fonterra, globalDairy Trade, Nigel Kuzemko
You may also like to read:
Loading ...
August 5th, 2009 at 8:38 am
Bernard
This is not really a a surprise (to me anyway), Due to the Credit crunch & declining sales a lot of the distribution channels have had to adjust their inventories, this will always cause a drop and correction.
Think of a piece of string where the tension is released and then reapplied (albeit somewhat less)
Neven
August 5th, 2009 at 8:47 am
Bernard
When do the details come out? Sounds like they have been playing with volumes. 5% used to be a big move in prices, this smacks of intervention or a stuff up.
August 5th, 2009 at 9:00 am
The release of information from this auction has been managed differently. This time the press release came out before the information was made available on the globaldairytrade website. Now the prices are available on the site but not the detail. The detailed data is still only up to last month.
Has anyone else been able to access the detailed data from this auction?
August 5th, 2009 at 9:13 am
Firstly, I think this is great news, I hope the start of an upward trend (though pity it is bringing the currency up on its coat-tails).
PeterR, yes, I’ve noticed the same problem as you. I was trying to follow the auction yesterday on the globaldairytrade site, but that site has changed completely the way they report information, and even now the price movement is not stated, and nothing went up yesterday at all. I’d like it back to the way it was, which had good clarity, and reported all the essentials.
August 5th, 2009 at 9:19 am
Mark.
If it is an upward trend (and three 26% increases will double the price) the worlds dairy farmers can and will quickly up production.
August 5th, 2009 at 9:23 am
Mark – the auction began at 1300 GMT (1 am this morning), which is why there was nothing yesterday.
August 5th, 2009 at 9:29 am
Trev: I always get caught out on Greenwich MT
And I’ve just had another look at the site, and they have updated the information to the old format, so all is right with the world.
PeterR: yes, farmers will, I don’t know ‘that’ quickly though, and anything to shore up this years payout, given the exchange rate heading for 68 cents, will be important.
August 5th, 2009 at 9:32 am
Almost all commodities are surging at the moment. This is another speculative bubble building and it could be extremely destabilising for the world economy. You can’t have a commodities bubble AND a bubble on Wall Street at the same time – something’s gotta give (didn’t we just learn that lesson?).
http://www.moneyweek.com/news-and-charts/economics/surging-commodity-prices-could-crush-this-recovery-71239.aspx
August 5th, 2009 at 9:36 am
Mark – I only know that ‘cos I spent time yesterday trying to get the information – like you did… then it dawned on me
August 5th, 2009 at 9:44 am
John Authers thinks China is in a Bubble too
http://www.ft.com/cms/s/0/64f4756c-7c63-11de-a7bf-00144feabdc0.html?nclick_check=1
August 5th, 2009 at 10:00 am
Agree with Neil C. Next stage in bubble – media desperate for readers/viewers hype up the fear/greed cycle, constantly bombard you with excessive noise, followed by subsequent panic.
Lesson learned? Never, ever, ever while humans are involved
August 5th, 2009 at 10:23 am
More about who’s behind all the bubble blowing here:
http://www.globalresearch.ca/index.php?context=va&aid=14637
August 5th, 2009 at 10:25 am
GloabalDairyTrade does indeed now have the data available.
It is interesting in terms of quantities. This year was going to see larger volumes sold through the auction, and the quantity sold last month was up over 70% on the previous year. This month that increase was back to 14% over the same auction a year earlier (that is including Australian sourced product).
Contract1 (October 2009 delivery) this auction was 6,000 tonnes as opposed to 8,500 tonnes last year.
Last year quantities available under auction were advised for the full year. Does anyone have that information available for this season?
August 5th, 2009 at 12:31 pm
Michael Hudson,
http://informationclearinghouse.info/article23191.htm
And a report on milk price volatility by Cornell.
http://dairy.cornell.edu/
Cornell predicted another spike in milk prices as high as last year but followed by a total bust. I doubted it but maybe im wrong, as bailout money heads for commodities.
August 5th, 2009 at 3:35 pm
neil c……………. wow! that’s some article(global research) still choking it down f..k. Good post.