Dairy prices fall one third since 2011 peak

BusinessDesk: Dairy prices fall, extending slide to lowest since August 2009 in Fonterra’s GDT auction

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BusinessDesk: Dairy prices fall, extending slide to lowest since August 2009 in Fonterra’s GDT auction

2nd May 12, 7:07am by BusinessDesk

Prices of dairy products extended their slide in Fonterra Cooperative Group’s latest GlobalDairyTrade auction, reaching the lowest since August 2009.

The GDT-TWI Price Index fell 2.4 percent compared to the last sale two weeks ago.

The average winning price dropped to US$2,843 a metric tonne.

The price of whole milk powder declined 2.2 percent to US$2,776 a tonne and skim milk powder fell 4.6 percent to US$2,730 a tonne.

The decline comes as Fonterra’s farm gate pricing faces political scrutiny in New Zealand, where the cooperative’s enabling legislation is getting its biggest overhaul since the world’s biggest dairy exporter was created in 2001.

Among changes are greater regulatory oversight of prices and the promotion of Fonterra’s Trading Among Farmers scheme that seeks to solidify its capital base.

Anhydrous milk fat dropped 13.6 percent to US$2,852 a tonne in the latest auction. Cheddar gained 3.1 percent to US$2,940 a tonne and milk protein concentrate declined 11.7 percent to US$3,990 a tonne. Rennet casein fell 0.5 percent to US$6,395 a tonne.

Lactose, which is sold by Australian dairy company Murray Goulburn, rose 3 percent to US$2,016 a tonne.

There were 119 winning bidders over 11 rounds, out of 136 participating bidders. The number of qualified bidders rose to 620 from 610.

(BusinessDesk)

Dairy prices

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Source: GlobalDairyTrade and USDA

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5 Comments

by Colin Riden | 2nd May 12, 8:06am 1335902788

The average winning price dropped to US$2,843 a metric tonne.

From US$4,826 a metric tonne at the 1st of March 2011. That equals a 41% fall (-0.4109 if you want it to 4 decimal places).

by Andrewj | 2nd May 12, 8:21am 1335903672

The graph looks like the classic, 'head and shoulders' to me. Where to from here, are we still expecting the dairy industry to grow at %10 a year? Still its better than the sheep industry has done.

Colin, where do you think the slide in prices is going to stop?

by Colin Riden | 2nd May 12, 8:43am 1335905026

Prices don't need to slide further for the NZ dairy industry to be trouble. And soon we will find out whether Fonterra's past and current strategies have simply been poor, or disastrously poor.

No time for more now - I am away today.

by walker janette | 2nd May 12, 4:37pm 1335933423

The ANZ Commodity Price Index fell sharply in April, down 4.5 percent from a month earlier to sit at an 18-month low. This represents the largest monthly percentage decrease in the index since February 2009. Twelve commodity prices weakened in April, three were unchanged and two increased.

The price of sheepmeat recorded the largest decrease in April, falling 12 percent from a month earlier, to an 18-month low. Wool prices fell 9 percent in the month, dropping to a 16-month low. Dairy and aluminium prices fell 6 percent in April, beef prices slipped 2 percent, log prices eased 1 percent and kiwifruit and seafood prices retraced half a percent. All the components in the dairy sub-total eased in April, led by a 7 percent fall in cheese. Milk powder prices dropped 6 percent, butter prices decreased 5 percent and casein prices eased 1 percent. In aggregate, international dairy prices have retraced back to the level that prevailed in August 2010.

The only commodities to record a price increase in April were wood pulp and pelts, lifting 4 and 5 percent respectively. Apple, venison and sawn timber prices were unchanged on a month earlier.

All in all the Banks will be twitching.

by Andy Rodgers | 2nd May 12, 9:49am 1335908955

I wonder how that company that was raising funds from retail investors for dairy farms in the South Island is doing? Was it a good indicator that the top in the dairy market had been reached?