WMP rises at auction but currency bites at the lift

globalDairyTrade, Fonterra's internet-based sales platform, concluded its October trading event this morning (NZT) with average prices for Whole Milk Powder up 5.7%. 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$3,022 per tonne FAS. This was US$164 per tonne higher than the September event. Prices ranged from US$2,825 per tonne FAS to US$3,095 per tonne FAS. Kelvin Wickham, managing director, Fonterra Global Trade, said it was expected prices would need to consolidate after the recent sharp rises. "We've seen a rebalancing in the market and we see market fundamentals supporting prices around their current levels," Mr Wickham said."In particular there's been keener demand from customers and a tighter supply situation for most products." However it is interesting to note that when this 5.7% increase is adjusted to the NZ currency based on yesterdays rate this converts to a 2.2% fall in price. A graphic illustration all NZ exports are facing with the firming exchange rates. ( Editor) Mr Wickham said although it was good to see prices firmer there remained a level of uncertainty given many economies were only beginning to recover from recession. "With prices at these levels we hope to see reduced subsidies and intervention by overseas governments."