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Whole milk powder price up 13.7% at latest Fonterra auction (Update 1)
November 4th, 2009The average whole milk powder price at Fonterra’s latest monthly internet auction rose 13.7% from October to US$3,437 per tonne overnight. The average price is now up 88% since its low of US$1,829 in July this year. (Update 1 includes Fonterra statement.)
The last time the average internet auction milk powder price was this high was in August 2008 while the price was on its way down in just the second auction that had been run. The latest price is the fourth consecutive rise for the average price.
The latest auction was the 17th run by Fonterra since July 2008 when the average price began at US$4,395.
Here is the full release from Fonterra:
globalDairyTrade, Fonterra’s internet-based sales platform, concluded its November trading event this morning (NZT) with the average price for Whole Milk Powder up 13.7%.
The trading manager, CRA International, advised Fonterra that the average price achieved across all contracts for Whole Milk Powder (WMP) was US$3,437 per tonne FAS. This was US$415 per tonne higher than the October event. Prices ranged from US$3,270 per tonne FAS to US$3,715 per tonne FAS.
Nigel Kuzemko, Director Commercial & Strategy, Fonterra Trade & Operations, said demand had been strengthening, along with pricing, in recent months and there was a more positive sentiment in the market. But the size of the lift in pricing this month showed customers demonstrating some urgency in refilling their supply chains.
“This is a reflection of the prices that buyers are prepared to pay on the day to secure product in these contract periods. And we do have a tight supply situation for most products.”
However, Mr Kuzemko said the recovery in consumer demand and the economic situation were still relatively fragile.
The recent move by the Dairy Management Committee of the European Commission to reduce the level of intervention in dairy markets was a positive step which would encourage market stabilisation. “It provides further confirmation of the improving market situation,” Mr Kuzemko said.
Anhydrous Milk Fat (AMF) was traded on globalDairyTrade for the first time. The average price achieved across all contracts was US$4,757 per tonne FAS.
Mr Kuzemko said AMF’s strong start confirmed a shortage of supply.
More than NZ$1 billion of product has now been sold on the globalDairyTrade platform, which was launched in July 2008.
The next globalDairyTrade trading event will be held on 1 December 2009.
Tags: Fonterra, milk price
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November 4th, 2009 at 7:53 am
Watch the price of cheese and milk shoot up in the shops. Does Alan have cheese on toast for lunch?
November 4th, 2009 at 8:33 am
With an 88% price increase Crafar might be able to buy some more farms.
November 4th, 2009 at 8:37 am
What is reported as good news is always bad news for us plebs.
Cheese, milk, yoghurt will all go up now.
Makes a mockery of the cries that the dollar is too high as well.
I hope it stays high. I like my petrol and imports cheap. Bugger the exporters.
We are stuffed anyway so I want some cheap comfort on the way down.
November 4th, 2009 at 8:42 am
I’ve lost weight since cutting butter and cheese out of my diet. Thanks Fonterra !!
November 4th, 2009 at 9:31 am
Contrary to past practice, Fonterra/GlobalDairytrade appear not to have released any information on the volumes sold.
There has also been a change in spinmaster.
November 4th, 2009 at 9:37 am
PeterR, globaldairytrade seems to be giving the volumes under the ‘Next Trading Session’ tab for some reason. Might be a stuff up on their site.
I’m a little perplexed because the last time I looked I’m sure it said the next auction date was going to be November 6, not last night. They must be able to shift the dates.
Anyway, another heartening result: they may be able to yet increase the payout further.
November 4th, 2009 at 9:43 am
Its interesting how there is a deafening silence about the actions of the online auction now the prices are going up. When it was going down everyone wanted Fonterra “hung , drawn and quartered “for having the auction.
November 4th, 2009 at 9:55 am
Isn’t there a milk glut in the US and Europe ??? Where does Fonterra’si milk get exported to?
November 4th, 2009 at 10:26 am
Thanks for that “We are stuffed”. Good to know there are still selfish people out there intent on bringing this country down. What an ignorant comment to make. If you understood basic economics, you might know that when exporters are getting paid more, there is more money in the economy floating around for you and your other “plebs”. This far outweighs the increase in your grocery bill each month.
November 4th, 2009 at 10:29 am
Thanks Mark.
I think those volumes are for the next trading event – useful but not the missing details about the just completed auction. The details may be released after the media interest in the press release has died away.
I am not sure these sorts of statements jell with reality:
The US Department for Agriculture quoted spot prices for butter from Oceania last week as 2,750-3,500 USD per tonne (At 0.72 NZD:USD that is 3,819-4,861 NZD per tonne).
Last week I bought butter in 500g retail packs in the supermarket at $1.98 – the equivalent of $3,520 per tonne before GST. That is not unusual and cheese is similarly regularly discounted ($6.00 per Kg). That is not to me indicative of a tight supply situation.
The retail price of consumer packaged dairy products being at significantly under spot prices for bulk product suggests that available international supply is being managed to inflate spot prices. That works, but only for so long as volume drops at higher prices.
Stats on NZ exports for butter in September show prices at just under $3,000 per tonne being the lowest since 2007. Spot prices and export receipts are not one and the same.
November 4th, 2009 at 10:38 am
Ross.
My analysis of Fonterra’s auctions (for which I need information on volumes) demonstrates that the prices achieved are above NZ’s average WMP export prices – particularly when China makes up a major part of those exports.
November 4th, 2009 at 3:16 pm
Volume details are now avaiable from GlobalDairytrade.