Dairy commodity prices dropped slightly overnight at Fonterra’s fortnightly global dairy auction.
The GlobalDairyTrade’s trade-weighted price index overnight fell 1.1 per cent compared with the last sale two weeks ago.
The average winning price was US$4891 (NZ$6277) a tonne, from US$494 a tonne.
Maximum supply, the measure of how much product Fonterra has for sale, fell to 54,137 tonnes from 56,742 tonnes, with a total of 53,473 tonnes sold.
The minimal drop came after Fonterra raised its payout forecast at the end of last month.
The 30c/kg lift in forecast to a record $7.80, attributed by Fonterra to continuing strong international dairy prices, also blows away fears that the dairy giant’s revenues would take a big hit from a consumer backlash to the botulism scare in early August.
The new forecast breaks the 2010-2011 record milk price of $7.60.
The 30c increase equates to $525 million for the economy.
New Zealand dairy commodity prices were more than 50 per cent higher than they were a year ago.
Westpac market strategist Imre Speizer said there was not an obvious reason for the slight dip in prices.
Last night’s drop could not be attributed to the much-talked-about demand resistance, Speizer said.
Prices were higher earlier in the year, in order for prices to meet resistance they would have to break through those record highs, he said.
In the latest auction six of the 10 product categories rose and one was not traded.
Milk protein concentrate led the gainers, down 3.8 per cent across all contracts.
Whole milk powder, the largest category by volume, fell 1.7 per cent.
Cheddar was down 3.2 per cent, with anhydrous milk fat and butter gaining 3.1 per cent and 2.7 per cent respectively.
In last night’s auction 199 bidders took part, with 126 winning bidders, and 873 qualified to bid.
The New Zealand dollar recently traded at 77.93 US cents, down from overnight highs of US78.35c.
Speizer said the pull-back of the New Zealand dollar against the greenback was in relation to the news of congress’s likely support of Obama’s military intervention in Syria.
»That caused a lot of volatility of a risk-off nature.»
The market’s risk-off sentiment caused the kiwi to slide, he said.
The news about Syria came out at about the same time the dairy auction finished, which made it hard to discern any market reaction to the slight dip in prices, Speizer said.
Source: Stuff