The dairy industry could be in for more bad news with milk powder prices expected to ease further at Fonterra's first global auction of the new year being held tonight. Sources fear whole milk powder prices could fall from an average of $NZ3900 ($US2300) a tonne in December's auction, to $NZ2500 ($US1500) a tonne this week due to the rapid easing of international dairy prices reports The ODT. Such has been the decline, Fonterra and other companies have started stockpiling product. Prices at Fonterra's globalDairyTrade auction fell 14% between November and December and have fallen regularly since the auction started last July when the average price was $NZ7600 ($US4500). Fonterra and major milk producers such as the United States have started stockpiling milk powder in response to the collapse in prices, but Fonterra said its inventory was in line with historic levels. It was known the dairy giant had been seeking temporary warehouse space, and in November purchased the former Fisher and Paykel plant at North Taieri where it planned to build a 45,000 tonne dry store and a 17,000 tonne cool store. A recent story in the New York Times said the United States Government had spent $NZ154 million ($US91 million) buying more than 50,000 tonnes of milk powder which was being stockpiled to underpin tumbling prices caused by a milk glut. It last bought milk powder in 2006 which was later used in government nutrition programmes, given away as animal feed or sold on the open market. The US Government was expected to start buying cheese to put a floor in the market as well.
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