Fonterra’s latest GlobalDairyTrade auction showed the broad price index leaping 7.7 per cent to $US2,920 ($3,805) per metric tonne.
The result drives the index to an 18-month high and comes after the prior two auctions delivered advances of 12.7 per cent and 6.6 per cent, respectively.
Whole milk powder (WMP) prices, which are crucial to the global industry, rose 3.7 per cent to a new 11-month peak.
WMP prices surged 19 per cent and 8.9 per cent across the two auctions held in August.
A global glut – driven largely by rising European supply – had driven weakness over the past two years, but the auction results suggest the worst may be behind the sector.
Fonterra chairman John Wilson expressed such sentiments a fortnight ago as the global giant raised prices for its NZ farmers, although the sector is wary given a rally around this time last year came to a brutal halt in October.
“Milk production is reducing in most dairying regions globally in response to low milk prices and this is bringing the world’s milk supply and demand back into balance,” Mr Wilson said.
“Milk production in the EU is now in decline and our New Zealand milk collection at this early stage is around 4 per cent lower for the year to date.”
It leaves farmers holding out hope for an uptick in the prices they receive from milk processors after a year marked by the stunning retrospective price reduction in fiscal 2016 by Murray Goulburn and Fonterra four months ago.
All of the nation’s largest processors trimmed prices offered to farmers for the fiscal 2017 season ahead of the sharp improvement in the global index.
The most severe cut was seen at the embattled Murray Goulburn, which declared an opening farmgate price of $4.31 per kilogram of milk solids. This compared unfavourably to an offer of $4.75 from Fonterra, $4.80 from Warrnambool Cheese and Butter, $5 from Bega Cheese and more than $5 from Lion.
Source: TheAustralian
Link: http://www.theaustralian.com.au/business/markets/global-dairy-prices-hit-18month-high/news-story/623d182ff08231e162d69c707e366393