Prices at Fonterra’s latest online dairy auction rose for the first time in two months, on what appeared to be flow-on effects of the drought in the US which has tightened global supplies.
The GDT-TWI Price Index rose 3.5 per cent compared with the last sale two weeks ago, when prices eased 0.9 per cent. The average winning price at last night’s sale was US$2797 (NZ$ 3460) per metric tonne.
Speculation has been building recently that New Zealand dairy prices were due to stage a recovery this year as a persistent drought in the US increased soy and grain prices, which are used as feed by dairy farmers on the west coast of the States.
How that will affect Fonterra’s farm gate payout is unclear, with ANZ noting in a report that speculation has been building of a downward revision to the forecast of $$5.50 per kilogram of milk solid.
If the payout is cut it’s likely to put pressure on the recovery in the rural economy, with farmers still struggling to get their balance sheets in the black after heavy lending in the run up to the Global Financial Crisis.
Of the eight product categories six saw price increases, led by an 11.5 per cent improvement in milk protein concentrate, and a 7.3 per cent increase in rennet casein.
Butter milk powder led price decliners, falling 8.6 per cent, followed by a 1.3 per cent drop in anhydrous milk fat prices.
Buying activity was focused on the near-term contracts, with the later dated side of the scales barely registering with bidders.
The sales saw 195 participants out of a 702 qualified bidders take part, with 142 winning bids.
http://www.stuff.co.nz/business/farming/7398529/Fonterra-prices-rise-on-US-drought