The Weekly Dairy Report: Westland hold firm on prices but Fonterra drops again

The Weekly Dairy Report: Westland hold firm on prices but Fonterra drops again


The weather looks to turn cold this week, with snow and harsh conditions introducing the region to winter, and unbelievably still little rain for North Canterbury.

Australian and Japanese weather forecasters have officially declared the existence of El Nino conditions, and if this weather system settles here, another dry period for the east coast areas of NZ could be arriving.

More herds are now being dried off, and those that are still milking are harvesting from the better conditioned later calving cows.

Meat processors report a heavy cull cow kill as managers adjust their farm systems to the new payout climate, and plan to feed a stocking rate that can be sustained on grass grown on farm.

Managers are being urged to be very careful with the transition to winter feed crops especially as the recent very mild temperatures, lack of frosts and rainfall, could increase the possibility of high levels of nitrates in crops.

Fonterra announced their 2015/16 forecast at $5.25 which was at an expected level, but caused some surprise by lowering this years prediction downward to $4.40/kg ms.

They also announced the new seasons advance at $3.66 which will excentuate the cash flow problems many in the industry are expected to face.

Westland stood firm on this years estimates at $4.90-$5.10, but were more optimistic for the coming season at $5.60-$6.00, putting further pressure on Fonterra to maintain market share of the milk take.

Global milk supplies are still ahead of demand, with the US milk production up 1.7% and last months flow a record.

The latest dairy land prices have held firm despite the gloomy market, although numbers of properties sold are well back on the previous year.


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News of the other supply/value chain.
Sounds like Hunan Dakang is in and Shanghai Pengxin is out....
Re the OIO references to Hunan Dakang, we must have missed them going thru, or was that just the Northland aggregation as the SP associates... anywho...

Hunan Dakang Pasture Farming Co. Ltd., incorporated in 1997, is a stock corporation Ltd. which was formerly Huaihua Foreign Trade & Livestock &Poultry Product Development Co., Ltd. and the change was approved by Leader Office of Local Finance and Securities in Hunan province. Dakang successfully went public on the SME market of Shenzhen Stock Exchange in November of 2010, stock code :002505.

In 2013, the company introduced a strategic investor, Shanghai Pengxin Group Co., Ltd. and raised 5 billion yuan via private placement. After completing private placement in April, 2014, the company phenomenally transformed itself from an enterprise involved in pig farming and sales solely to a world class “protein food supplier and service provider covering production and sales of dairy products, breeding and processing of pork and mutton, and sales of beef. The company has four major business pillars including dairy, mutton& sheep industry, cattle industry and pig industry; we have large sheep farming bases in Anhui and Hunan province; a complete industry chain has been established in Hunan, from breeding, farming &production, slaughtering, sales to cold chain logistics. And the company joined hands with Snowdragon Beef Co., Ltd to develop quality beef sales in high-end market.

New Zealand , known as “The last clean land in the world”, is a synonym of source of golden milk in the globe. Our company has pastures of our own in New Zealand, which belonged to Ngati Tuwharetoa tribe in the center of North Island of New Zealand. All of our pastures are located in the heart of dairy region of New Zealand at 40 degrees north. With the unique Maori primitive environment plus the location of these golden pastures , they are truly “the golden pastures out of golden pastures”. All products are firstly subject to official quality assurance of New Zealand Insight system , ensuring global traceability from the start to the end, and all milk are directly shipped from the pastures to Chinese consumers, a new height in global dairy industry.

and then [shouldn't someone tell them].....
The newly-appointed CEO, Mr. Gary Romano and the president, Liu Wei went to Hunan for work supervision.
They listened to work report by business department in Hunan, praised the rapid development of mutton sheep industry in Hunan, and came to communicate with the front-line employees pleasantly in the cultivating base.

by way of background

Shipped directly from pasture to Chinese consumers - yes, and I think it was Shanghai Pengxin where I read the words, "control of production from paddock to plate, to avoid the use of third parties" Third parties? That's us folks.
We are stupid.
And today in the Herald I see a $495,000 property in Henderson (yes that's Henderson) on an 1100sq metre section sold for nearly $1million to who? See for yourself
This is ENTRY LEVEL Henderson, what the hell chance do NZers have, something absolutely must be done.
Not only will we not be able to afford our own land and homes, we will not have our own food to eat as it will be all earmarked for people elsewhere. Look at us, donating WATER to be exported. Stupid.

I don't begrudge the owners but you have to say this is nuts, the RE agent spinning it as competition for good investment property does he think we are all stupid on any level there is no yield. it is brought purely for capital gain then in another breath saying the buyers have flown back to china. what benefit is this for NZ and if I hear another polly say this is overseas capital that we need to grow I will scream.
the sooner they close this door the better, apart from new builds there is no logical reason to allow foreigners to buy residential houses

how can they close the door, the economy will crash, Key has signed us all up for the ponzi, and there's no getting off the ride. Key goes on these overseas trips trying to set up free trade deals, but what he is really doing is trying to sell off our country.

When are Kiwis going to wake up to what Key and his cronies are doing to NZ. These are traitorous acts. Yet the smiling assassin (Be all you can be, and assassinate a whole country of your birth, but not of your retirement) keeps leaping ahead in the polls? What is wrong with Kiwis?

What is he actually doing wrong ? Labour certainly has no MP capable of replacing him. Key is the best of a bad bunch.

Not by a long stretch, Gordon, he is nothing but a cynical gambler, gambling our country's future as he seeks political "immortality"

In-correct, Labour has several MPs good enough and capable to be PM. What they dont have is electable policies.

Who are these Labour stars? I would love to know.

And that's the burning 64billion dollar question _why_ don't they have good policies?

Why can't they put anything to the fore? If they have good politicians whats preventing them bringing them out or pushing those ideas - if they can't do it in their own party, how can they be expected to do it in the house. and _why_ can't they? Why _wouldn't_ they? And why are the watchdogs and media unwillingly to drag it all out in the light??

And to get these "FTA's"he seems to be willing to sell the country's soul to the devil. I mean what on earth is really behind this bribe paid to that Saudi, and all McCully can do is blame Labour. That strategy is overused and utterly tired, and nowhere near credible

really well said.... Throw on top of that the building of brands and you wonder how smart our leaders are..????? "control of production from paddock to plate" + creating a brand ..... sounds like a great business to me.
I saw an episode of Country Calander where a farmer did just that... Downsized his herd to 60 cows that produced "high quality" milk.... and made cheese etc in a factory that he built on the farm...( which created local employment ).... great win/win example as well as a contrast to the normal mantra of "economy of scale" a reason for "mega factories"...
The house in Henderson may be entry level... BUT.... it is an example of the distortions caused by the new Unitary Plan that results in the revaluing of land..???? ... BUT ..yes...I get your point..

You need to own the land to be able to do that - and still be young enough to care about changing to it.

most your folk are stuck on the bank treadmill, and the industry fix/cartel keeps them there. Fonterra and industry feeds the watchdogs bs so no-one looks into it. eg talking to DairyNZ the other day according to them in 2013, the average farm was 150,000 kgMS and the average sharemilker drawings was $71,000 (and farmers was $90,000). Doesn't sound bad at all..... unless you know the numbers. Those numbers just don't add up with the business analytics, but hey they're the ones with the big salaries and expertise - so I must have done something very wrong.

This is from a post on Fb of a prominent Northland Dairy Farmer

Interesting commentary when current trading for other farmers uses a Fonterra index to indicate returns and even milk I Aussie is trading at $6.00 is 1.25 times more than NZ farmers are getting. Current milk prices in China are 10 times the Fonterra index. US farmer returns in California are still above 1.15 the Fonterra index. Every trading county Fonterra shareholders own processing stainless steel at the moment has higher returns than New Zealand farm gate returns! Has our Co-operative turned into a multi-dimensional Corporate that enjoys paying large senior management wages and has forgotten both producer ad shareholder?

Whats the point.

commerce commission tells me they're doing nothing wrong (money speaks eh?)

We said this would happen when TAF was pushed through.
It was exactly the type of behaviour that farmers screamed about at Fonterra's first (pre-TAF) manifesto.
It was said again when the Chinese brought Crafar farms.

We've been saying about Auckland housing.

TPPA will cement the deal - Fonterra loves TPPA, even though the farmers and shareholders they're representing hate it and say no - but Fonterra just outright ignores shareholders/shareholder council members. NZ is getting the ruling and governance that it's paying for.

Not rhetorical questions

Who elects the board of directors?

Why is there a separate shareholders council?

What's their function?

Who elects the council members?

13 directors. 9 farmer directors, 4 independent. Farmer Directors elected by farmer shareholder. Voting is STV - single transferable not first past the post. Votes are based on milk solids supplied - the more ms you produce the bigger the impact of your voting. It can make the 'deadwood' on the Board hard to vote off. Board appoints independents and these appointments are ratified at the AGM.

Shareholders Council are elected by farmers - FPP voting system. Supposed to represent the views of all shareholder farmers - but IMO, in reality is a sanitised mouthpiece for the Board. There is opportunity for the Council to influence the Board elections via the CAP (Candidate Assessment Policy)

Three directors retire by rotation each year and may stand for re-election. This year John Wilson, Nicola Shadbolt and Blue Read are up for re-election. Who ever attends, as director, the Southland Accounts meeting prior to the AGM appears to be the favoured son - there are no favoured daughters ;-) in Fonterra despite their being 2 female directors - possibly a thorn in the side of some Board members. Southland is usually a 'must win' as highest voting as percentage of number of shareholders happens in Southland. Lots of immigrant farmers who like to voice their views. ;-) Canterbury is also an important region to win. :-)


I see the problem

It's universal

There's a separate council, and they generally from farmer-landlords with sizeable holdings or partners thereof, or with degree in agriculture/business. The pretty much all agree that "to preserve a unified front" they all end up a bunch of yes-man, fed bullshit, and ignored. Not a real farmer amongst them, few even have to run a farming business themselves. There function is to stop Fonterra doing exactly what it has been doing over the last 2-5 years and protect the interests of the co-op suppliers.

Also certain company folks also get voting shares as part of their remuneration package

when Fonterra was set up it was on the premise that farmers need to get together and create a company to compete against the world and not themselves in NZ. Hind site now shows us what has been created is a huge bureaucracy that seems to be working for a few not the many as supposed to in a coop.
we also have other companies now setting up in NZ to compete which have waiting list of farmers wanting to abandon ship.
I am invested in two farms one supplies Fonterra and one supplies open country and the open country one does better

When you say 'does better' I take it that you are referring purely to the financial outcomes because of hte processor, and not any underlying difference in location/management of the farm? I understand OCD supplier cashflows are quite a bit better than Fonterra, sharetrader? If I was supplying a corporate I would pick OCD over Synlait, any day - if there was such a choice.

It's going to be interesting to watch Danone's expansion in the South.

If I was a dairy farmer and i could afford to do it, i would do what a guy in our area has done . He killed all his cows sold his shares and put bulls on. No fonterra, less environmental costs, staffing problems ,less exposure to one corrupt market.

I would recommend selling supplimentary feed. Get your contracts tied in solid and early.

No Fonterror, No animal rights or medical issues, no suppliment feed overheads. and you can sell grazing in the winter when your supplimentary feed isn't harvestable. No effluent distribution problems.
possibly do a crop and use a fast growing annual for that winter grazing, cross-slot or no till sowing.

Plenty of droughts and floods coming up, let global warming be your friend.
Don't even need to fence off your creeks.

I'd be 60c kgMS better off if I'd just sent all the stock to the works last year.

What I find annoying is that this is just a direct repeat of what happened in the roman times with the Latifundium.

Likewise "globalisation" the "big new thing" is exactly the repeat of the Roman roads and opening up of specialist territories and heavily controlled trade routes (and sponsored by special interested parties).

Heck even social media is just the roman baths and messenger system.

I saw a doco on tv, the other day about China. They were interviewing ordinary people. What's interesting is how technology has been used as a way to keep the hordes happy. Give them electronic gadgets and a few trinkets and they think they have got it made. But they are still a government controlled society, censored internet, they will bulldoze someones house and build a motorway, it's just tough luck, you don't argue with the communist party. They interviewed an old woman and asked her if she would like to get rich in the new China, she replied I just want freedom.... Now I think about how NZ has changed since globalisation. Cheap electronics and drugs to keep the masses happy, a government smear campaign against NZ farming introducing more and more draconian and non sensical regulation ( but what a great job chinese owned farms are doing here.. winning awards..), Government regulation making things difficult for small business., all with very little public complaint. Dairy farmers in particular have been overpaid and at the same time had freedoms slashed and Political Correctness is now the new norm. Our media has been sanitised. People who ask tough questions being replaced by gossip magazine style media, resulting in total public apathy about issues like government paying bribes etc . National Party members just giggling and laughing off serious accusations against them of bribery and corruption. So what have we got out of it ?Some of us are getting very rich at the expense of future generations. and we are losing our country ( sold off to the highest foreign bidders) and our freedoms. But we all love John Key and his Communist National front party because they are such nice people with lovely smiles..... Sorry, that's my rant for the day.

Well said tim. I also think farmers have been asleep at the wheel by letting 'industry' speak/make agreements on our behalf. e.g. Fonterra and DairyNZ are part of developing 'Accords' for our industry. They argue that if they don't the government will bring in restrictive measures anyway. But rather fight in our corner and/or question 'Why', they just acquiesce.

What I am seeing starting to happen is that there are a small, but growing numbers of farmers who are wanting to take back the discussions at a grassroots level. Fonterra and DairyNZ do not speak on my behalf unless they are presenting science etc.

A bouquet for DairyNZ - their Environmental Leaders Forum is just what is needed - building capacity/leadership at grassroots level.

Recently I heard that Dairy Womens Network (DWN) had allowed their brand to be placed on an employment accord that DairyNZ is working on. I heard it as: DairyNZ needed them to sign off, at a Board meeting that DWN were happy for the DWN logo to be used. However the draft accord was not tabled at the meeting so the Board members had not seen it. They were under pressure to make a decision at that particular meeting of yes/no, so agreed to it, sight unseen. Then DairyNZ has the audacity to say that DWN represents dairy farmers! DWN is a Private Training Organisation nothing more, nothing less. They have no mandate to say they represent the dairy industry. If they were a subscription based organisation they may be able to lay claim to representing their members. But they aren't.

I have a real problem with 'Industry' signing off on my behalf. 'Industry' is quite removed from the grassroots farmers. We are getting a 'one size fits all' set of regulations/policies that take no account for regional variations. I have heard MPI are keen to get a national template for water quality/environment issues that all Regional Councils use. But I understand there would be some flexibility for regional considerations. Their mantra is that then if a farmer in the Waikato buys a farm in Southland then they know what the rules are re water. Problem I see with that e.g. is that the Waikato and Southland are very different - in terms of soil types. Heck not even all the Waikato is the same. ;-) Once you add variations for regional differences do you really have a national template? No you don't. But I guess developing the template and workshops etc associated with it will keep many employed and cost lots of taxpayer money.

We need to take our communities back - local solutions for local issues. Perhaps the catalyst will be the 'bloodbath' an Auckland based journo predicted will happen when urban Auckland realises the millions of dollars that will need to be spent by ratepayers in order to make all their beaches swimmable. It's not just Auckland. At present urban NZ is largely MIA in regards to cleaning up their stormwater discharges. But the reckoning day is coming.

When is enough enough when it comes to Chinese investment in the New Zealand dairy sector?

Seems Fran has had a strategic re-positioning.
- note the comments section...

New Zealand Trade and Enterprise's capital advisers report a big uptick in visits by potential Chinese investors in the sector and some sizeable chunks of dairy farmland are now the subject of applications to the Overseas Investment Office (OIO) which have yet to be disclosed publicly.

Has this Questions are also being asked within international dairy circles over whether China has been trying to manage down dairy prices so as to keep its own inflation rates under control

led to this
The Akurala infant formula launched by Synlait and New Hope on an online platform in China at a fraction of the usual imported prices is now being sold at low prices in supermarkets.

Will be interesting to see who our government will support if USA and China starts firing shots at each other in the South China Sea. Can we afford NOT to support China? ;-)

I suspect Chinese importers rehypothecated our dairy powders.

You think too much, governments are simple corruption is rife.

China is new to Capitalism, they still have their training wheels on.

You can sell a simple house in Melbourne for 4.5 million but if you have to earn 4.5 million it's nearly impossible.

Our world is being turned up side down nothing is what it seems.

A friend sent me this
Anyone using logic, reason, historical precedent, facts, and utilizing
> basic mathematics is declared a doomer in today’s world. The sheep
> would rather follow assertive idiots than an introspective wise
> person. We are awash in assertive idiots in control of Congress,
> government agencies, Wall Street, mainstream media, and the corporate
> world. The psychopathic lemmings will meet their demise in due time.
> It will be obvious after the fact.
> “It has been more profitable for us to bind together in the wrong
> direction than to be alone in the right one. Those who have followed
> the assertive idiot rather than the introspective wise person have
> passed us some of their genes. This is apparent from a social
> pathology: psychopaths rally followers.” – Nassim Nicholas Taleb, The
> Black Swan: The Impact of the Highly Improbable

Hypothecated - Guaranteed

An investigation last year into chinese imports of Copper and Iron Ore and Coal and stockpiling (particularly of copper) found the stock-piles were being used as collateral to pay for the next shipment about due. Shipments still at sea and yet to arrive were also being hypothecated to cover the following shipment.


When the gravy train slowed down to first-gear, the snowball effect of margin calls escalated, forcing commodity prices down by 60% Cant see dairy stockpiles and shipments escaping that. It's the way business is done

"Forward, the Light Brigade!"
Was there a man dismay'd?
Not tho' the soldier knew
Someone had blunder'd:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do and die:
Into the valley of Death
Rode the six hundred.

Ruth Richardson recently defended Synlait's new marketing strategy - disruption of the market - her words. She didn't answer the question of why you would sell a premium product at a very discounted price.

But Richardson says real camaraderie is now building, pointing to the shopping expedition she enjoyed with Ke Li after a board meeting in Manila. She credits Bright Dairy president Guo Benheng as being the "Godfather of the project".

Price Management - of course

Worth repeating from 3 years ago

iconoclast Wed 04/07/2012

Can history repeat itself? Will China turn the taps off?

extract from a 2007 paper written at the beginning of the GFC

the wool boom - episode 1
During the 1960's Australia and New Zealand enjoyed one of the greatest wool booms.
Cant find any documentation on the Australian effect but this on New Zealand Wool Boom

the wool boom - epsisode 2
In 1972 and 1978 the oil shocks arrived. Oil went to $80pb. Petroleum based synthetic fibres became more expensive than natural fibres, which led to the next Australian and New Zealand wool boom, which continued into the early 1980's.

In the period 1985-1995 oil fell back to $10 pb with an inevitable collapse in wool demand.
Australia and NZ ended the 1980's early 1990's with massive wool stockpiles.

Extract from (paragraph 13)
China, a new economic tiger, fuelled the market. Then in 1988 it withdrew totally. By 1991, seventy per cent of all wool produced was passed in at auction and bought by the AWC. The wool boom burst, inevitably and traumatically.

With this one act China discovered the enormous power it had, and how to exercise it to its advantage.

Extract from
During 1980-1990 the Australian Wool Reserve Price Scheme continued to purchase virtually the entire Australian wool clip and nearly all private stockholdings world-wide at prices far higher than any foreign buyer or consumer was willing to pay. Eventually, the Australian Government walked away from it, realising there were limits to the extent that tax payers were willing to pay to bail out such stupidity. Today, Australia still has a huge unwanted wool stockpile.

Once Chinese processing capacity in NZ is sorted, expect history to repeat. ;-)

trouble at mill.

Fonterra has signaled the possibility of a major shake-up throughout its operations entailing job losses from senior management down.

Chief operating officer of Velocity, Jacqueline Chow, said in a statement the review was being done by local and international consultants. [$$$$$]. It was confirmed high profile United States-based consultant firm McKinsey was involved.

Our understanding is that consultants work best when first having been told the answer they need model/workshop/slide deck their way to presenting, hope to be proved wrong :(.

Sounds like the value of stock on hand from last year, and its need for re-adjustment took say 10 to 12 cents off the pool for dividends.

This sums up why shareholders say communication from Fonterra is not what it should be:
It had not planned to reveal the move till its annual meeting in November.

This has been spoken about on the shareholder grapevine since the Interim Accounts meetings.

history never repeats....... mind you this was in a November..

Mr Nattrass suspected he may be the fallguy for a low payout. Fonterra farmers had a rough ride last financial year and many ran into severe cashflow problems after banking on the co-operative's early 2008-09 payout forecast of $7/kg milksolids and ending it after several recession batterings at $5.10/kg.

Last week's announcement of a 95c/kg lift in the 2009-2010 payout forecast of $6.05/kg appears to have come too late for Mr Nattrass.

He rejected any suggestion that his championship of the 2008 launch of Fonterra's controversial monthly internet auction of wholemilk powder contributed to his dumping. Fonterra sells about 10 per cent of its product on the online auction which was launched just as international commodity prices started to tumble in July last year.

The auction was blamed for dragging down international prices because Fonterra is the world's biggest dairy exporter of wholemilk powder.

The very obvious thing with globilisation is that in the long run the people that can borrow at the lowest interest rates (big corporates and people in powerful position) will own everything. Basically because they are chasing yeild and they don't require as much because they are borrowing money for nothing. So a dairy farmer may be struggling at the moment to pay their interest bill, but a chinese coroprate farm in NZ, doesn't care about the low pay out, only a matter of time before they can expand. Likewise with Auckland property when the market peaks and locals traders stop making capital gain and they want to sell because their yeild is too low, who can buy? Foreigners who can afford to own property with lower yield because they are borrowing for less. It's called interest rate apartheid.

lucky for some
Fonterra Australia has stepped up prices for its Australian suppliers to an average weighted price of $6 a kilogram milk solids.

Has anyone detail of this over there
The Milk Price Range allows participating suppliers to lock in a volume of milk within a set price range – nominating monthly minimum and maximum range prices for a certain volume of their milk solids in a season.

or how the farm buying equity fund is going?

Must be something to do with the competition.

The price brings Fonterra’s price to the same as other major processors Murray Goulburn and Warrnambool Cheese and Butter.

Don't think it the time for a pot peeing competition.
Would it kill them to stay at 5.85 or less.

wouldn't look good for a world class company to pay less than the competition. Ego's at stake.

You mean some may be wishing for Ozz, or the willful Ozz exe types?
ex 11 May, no sense of consultants running a dose of salts thru the joint.
Thou we note the (27)m loss in China farming (look below for the cost levels in China)

Aj (something for your files), the analysis and recipe is almost available free to anyone,
see page 44 for a measurement template for Fonterra
with respect (12 mths ago) they did say the risk was on the downside

Back to Ozz, let the others pay over the world price (to be paid for by the ASX investor), one can turn on supply in Australia, anytime, just by increasing the farmgate price, to those suppliers one wishes - milk is is not is short supply - gee you could even partially ASX list the Ozz assets.

It looked a lot better investment after the bottle of Savi Blanc at lunch. Anyway you farming lot are a captive audience, what you going to do about it? I'm a bargain for a couple of mill a year?.

yes, you are priceless...., whereas the consultants are unaffordable at any cost.

us, we are grumpy going thru budgets, sold some bits a bobs, determined not to run a trading loss

It seems to us that the 15/16 $5.25 got picked as it is the average of the last 15 years (would like to be wrong).

and this from the stockbroker (least not a all singing all etc bank economist)..

we are not sure the shares are yet (good value) as dividend buyers will be put off and there is probably a weight of supplier selling to come.

The first thing we learn in sociopath training is ' never admit you are wrong', Just put more pressure on the throttle. If it fails it's due to market forces outside our control.

You keep this up you will need to be sent away on one of our reprogramming courses, oop's sorry I meant bank funded leadership courses, for the up and coming leaders among us.

Thanks Henry for those links. Always appreciated. :-)

I see they are still pushing ahead with the big irrigation projects, even expanding them

if only it could be paid with by milk alone

as an aside what sort of a margin would you have priced the civil contract?

no worries,
policy and business debate would be much clearer if there was more of a common appreciation of industry nature. the pg... link doc we think helps.

don't be put off by the first two pages in china script.

Don't hear anything at all - not high on the radar

Can you see these archives?

It's the Weekly Rural Landline report

Here is the latest

If you are not geo-blocked you can follow it week-to-week

happy new year:
Average price (USD/MT, FAS) $ 2,309

thinking about market or price signals.
looking back the shame is the biggest was always using their own (US$3,500)

looking at Ozz, they seem to be using a MG price (MG in middle of capital raise) a competitors price, rather than the price the product can be sold at (a supermarket price or a off shore buyers price) to pay with.

one of the kids, head up from the oats, asked why not use NZ powder to make yoghurt to sell in the Ozz supermarkets (they had read that china based folk were using NZ powder to make infant formula in VIC then selling as made in Ozz.), his sister said don't speak with your mouth full.

Demand still not enough'

Dave Kurzawski, a trader at broker INTL FCStone in Chicago, said that the decline reflected continued ideas that production has not been curtailed to match better demand.

"World demand has still not been enough to overtake the available supply or to cause any worry internationally," Mr Kurzawski told

And he saw no immediate end to the bearish fundamentals.

"Strap in for a situation where prices are going to be travelling sideways for some time unless something comes out of the woodwork," he said.