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Milk powder price down 1.6% in Fonterra’s February auction; down 8.5% from December
February 3rd, 2010Fonterra’s February auction of whole milk powder (WMP) on its globalDairyTrade online platform produced an average price of US$3,256 a tonne, down 1.6% from January’s average price and down 8.5% from its recent peak of US$3,560 reached in December. However it remains 78% above its low of US$1,829 in July last year.
The average price for Anhydrous Milk Fat fell 7.9% to US$4,183 a tonne.
Here is the rest of the Fonterra statement below:
Paul Grave, globalDairyTrade Manager, said the result was within the range of price movements expected in the current market environment and signalled that the market was in reasonable balance.
“It is encouraging to see that prices remain relatively stable in a range that is high by historic standards,” Mr Grave said.
“This result is positive given that over the last month dairy prices have been under pressure in Europe and the US.”
For Anhydrous Milk Fat (AMF), the average price achieved across all contracts and contract periods was US$4,183 per tonne FAS. This was US$356 per tonne, or 7.9%, lower than the January event.
Overall pricing decreased 2.4% across both AMF and WMP.
The next globalDairyTrade trading event will be held on March 2, 2010 and will include sales of Skim Milk Powder
Tags: Fonterra, Whole Milk Powder
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February 3rd, 2010 at 10:46 am
Paul Graves is sounding decidely bearish this month – at least for someone representing Fonterra.
I think I would take issue with the reasonable balance bit:
http://www.agprodecon.org/images/DairyPrices/MonthlyMPtoChinaPVP290110.gif
http://www.agprodecon.org/images/DairyPrices/GDTPrices020210.gif
Particularly given the correlataion of increasing export value to China with decreasing export prices:
http://www.agprodecon.org/images/DairyPrices/NZMPtoChinaPVCfrom2006-290110.gif
February 3rd, 2010 at 12:39 pm
Holy cup-cakes,head for the hills.
February 3rd, 2010 at 1:50 pm
Somewhere in here is our problem,our cost of production have intersected the USA’s will our cost continue to climb?
February 3rd, 2010 at 3:12 pm
It is a long time since my Econometrics lectures, but an r2 of 0.4 is not great (correlataion of increasing export value to China with decreasing export prices).
That said it is difficult to judge without the data set, calculations and assumptions
February 3rd, 2010 at 5:08 pm
Trev,
Given a possible range from -1 to +1, 0.43 is a long way from neutral or the negative values you would hope for given how exports to China have been talked up. The slope of the line suggests that for every one percent increase in China’s share of our milk powder exports the price drops by about $160 per tonne. Given that China’s YoY 2009 increase over 2008 was 11% it is high time our increasing dependence on China as our main export destination for milk powder was more broadly discussed.
It is also important to note that correlation is not necessarily causal. China appears to be soaking up volumes of milk powder that would otherwise depress the market but at less than market price. The problem would appear to be due to a shortage of world demand/excess supply at current spot or auction prices.
February 3rd, 2010 at 5:11 pm
Wonder if it is on SALE or RETURN.
February 3rd, 2010 at 5:19 pm
SORE-LOSER,
I would certainly expect it to be on a different basis to any other buyer.