Fonterra appears to be expecting to buck market trends and sell more dairy product into China.
It recently cited 'strong demand' from emerging markets like China for an up-tick in sales, one that is holding up prices in its online auction platform, globalDairytrade.
However, US officials have reportedly slashed expectations for purchases of whole milk powder by China, by far the biggest importer, warning that higher prices have made the product unaffordable for many buyers.
Online news service Agrimoney is reporting:
China will this year import 350,000 tonnes of whole milk powder, used largely in making chocolates, ice cream and yoghurt, nearly 50,000 tonnes fewer than previously expected, US Department of Agriculture officials in Beijing said.
For 2012, the import estimate was cut by 75,000 tonnes to 375,000 tonnes.
The figures, while still enough to leave China as by far the top buyer of the product, ahead of Algeria, follow trade data showing imports tailing off in the second half of 2011, coming in in October at half the levels of the same month last year.
What may be keeping imports higher than is justified by sinking local demand is the ongoing safety concerns around locally-supplied milk.
State media on Friday said that a Chinese dairy farmer had been sentenced to death for lacing a competitor's milk supply with melamine in revenge over business disputes. The contamination caused the deaths of three children, with 36 people hospitalised.
Earlier, Fonterra-linked Sanlu was embroiled in a major melamine-tainting scandal.
But local China demand is very price sensitive, and higher costs for imported product shifts demand for locally-produced supplies. Higher costs have "put imported whole milk powder out of the reach of many smaller domestic processors", the USDA officials said, putting the rise in the first 10 months of the year at 9%.
4 Comments
Fonterra is run by a bunch of cowboys that want to demutualise the Coop,and provide instant riches to firstly themselves,and secondly the ïnvestor "smart money that follows the smell. This school milk stuff,another 20 cents is part of a very expensive scenario of corporate bullshit and brainwashing.
Bruno; they ain't cowboys but this was always part of the Fonterra masterplan. Near total monopoly would never have made it past the post in day one under any other guise than a co-op. They just await the right opportunity to swing that around.
Now the farmer shareholders need to stand up and retain control. Otherwise the money boys will bring in their consultant mates and we will watch the private version of a "State Asset Selloff".
Farmers sons/daughters and future generations foregoing any chance of farm ownership and working for multinational companies.
The tax take wouldn't change too much; just mostly head offshore instead of being avoided. It would be very sad for our future and crucify support industries though.
Yeah. They are not cowboys. But they are very smart manipulators of public and shareholder opinion. The so called mandate sir Henry thinks he has to sell the Co-op was years ago and sold to shareholders under false pretences. Dairy farmers need to stop these bastards in their tracks.
I wouldn't say they are smart manipulators of public opinion, despite best efforts from spin doctor consultants , the media love of sticking the boot into farmers which rubs off on Fonterra. As a shareholder I agree that through a onslaught of propaganda and spin they manipulate shareholder opinion. If correct it makes a mockery of being part of a co-operative. Having said that shareholders seem happy enough with this style, so long as the payout keeps the wolf from the door, they're either supportive (sucked in) or ambivalent to politics and hybredisation to a corporate.
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