Prices at Fonterra’s latest online dairy auction continued to ease following last week’s 5.9 percent plunge, with global growth concerns and a stronger US dollar weighing on demand.
The prices Fonterra gets at the online dairy auctions determine the payout it passes on to farmers. That, in turn, is closely watched as a lead into the rural economy, a sector that has remained largely subdued since the global financial crisis.
The GDT-TWI Price Index fell 0.9 per cent compared with the last sale two weeks ago, with an average winning price of $2756 per metric ton.
«The result was certainly consistent with the recent firming in the US dollar, but is a little disappointing in the context of rising prices for other soft commodities,» said Mike Jones, a market strategist at Bank of New Zealand.
Only three of the eight product categories recorded prices declines, led by a 5.8 percent drop in whole milk powder, followed by a 2.9 percent fall in cheddar, and a 1.8 percent easing in rennet casein.
Butter prices saw the biggest gain at the sale, up 7.2 percent on two weeks ago, followed by a 5.2 percent increase in skim milk powder.
«We suspect the risks are for higher prices in the next few auctions reflecting worsening US drought conditions and soaring global grains prices,» Jones said.
Global commodity prices fell 1.1 percent to 295.64 overnight, as measured by the Thomson Reuters Jefferies CRB Index, which tracks a mixed basket of 19 soft and hard commodities.
The sales saw 155 participants out of a 692 qualified bidders take part, with 114 2winning bids.
The next GlobalDairyTrade auction will take place on August 1st.