Dairy price slide on hold

Share on twitter
Share on facebook
Share on linkedin
Share on whatsapp
Share on email

Dairy prices have stabilised but not enough to prevent Fonterra having to cut its milk price forecast, economists say.

Prices were flat at the GlobalDairyTrade auction overnight before Fonterra’s payout update next week, when it is tipped to cut the forecast milk price it pays farmers.

The average winning milk price at the auction was US$2795 ($3408), barely changed from US$2787 at the previous auction two weeks ago.

Prices are down 45 per cent since February 4.

Before last night’s auction, prices had fallen at 10 of the previous 11 auctions.

ANZ economists said current price levels and Fonterra’s assumed New Zealand dollar hedging position translated into a milk price about the mid-$4 mark per kilogram of milksolids.

«This is well below Fonterra’s current 2014-15 forecast of $6/kg MS, so you need to see an improvement in prices if this is to be achieved,» they said.

«While Fonterra have been optimistic of a bounce-back, given recent auction results it is difficult to see them being able to hold this next week.

«Last night’s result might hold some hope that a turnaround is on the horizon, so the move might be more towards the mid-$5/kg MS, as opposed to the low-$5/kg MS at this stage.»

ASB rural economist Nathan Penny said the auction results were a «mixed bag», and ASB would revise down its forecast milk price from $5.80/kg.

«Overall, forward prices point to less future price support than previously,» he said.

The trade-weighted GlobalDairyTrade price index was unchanged at last night’s auction at 822 points, the lowest level since August 2012.

Auction volume was down, with 50,801 tonnes sold, an 11 per cent drop from the previous auction but the second-highest volume this year.

Prices for whole-milk powder, the largest category by volume, increased by o.6 per cent, while skim-milk powder, which had fallen by more than 22 per cent over the previous two auctions, edged up by 0.9 per cent.

Rennet casein also had a price increase, up 1.3 per cent.

Butter-milk powder (down 6.9 per cent) and cheddar (down 6.5 per cent) had the biggest declines.

Butter was down 2.5 per cent and anhydrous milk fat was down 2.2 per cent.

Lactose was not offered at the auction.

Sweet whey powder, on offer at the auction for the first time, sold for US$1295 a tonne. It was supplied by European company Molkerei Ammerland.

Fonterra will announce its revised forecast, as well as its final payout for this season, next Wednesday, when it unveils its annual result.

It is forecasting a milk price of $8.40kg, with a dividend of 10c a share.

Source: Stuff

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

Te puede interesar

Notas
Relacionadas