Global milk prices fall 0.5%, says world’s biggest dairy exporter

International milk prices slipped at the latest global auction, New Zealand’s Fonterra Co-operative Group, the world’s biggest dairy exporter, said yesterday as prices reversed a rise at the previous sale.

Fonterra’s Global Dairy Trade-Trade Weighted Index, which covers 30 products and contract periods on offer, fell 0.5%, with an average selling price of $3,042 (€2,400) per tonne.

Prices resumed their downward trend of the past two months, after climbing 13.5% at the last auction earlier this month.

The largest price fall was in skim milk powder, down 4.8%, while cheddar prices also slipped. A further slide in overall prices was limited by a rise in whole milk pow-der and butter milk powder.

The index has fallen around 30% since hitting a near four-year peak in March last year.

Fonterra last month cut its forecast payout for the just-ended 2011/12 season by around 4.5%, to NZ$6.45 to NZ$6.55 (€4-€4.10) a kg of milk solids.

It has made an initial forecast for the new season of NZ$5.95 to NZ$6.05, made up of a milk price of NZ$5.50 a kilo of milk solids and an added dividend of between 45c-55c .

Fonterra is owned by about 10,500 farmers and controls around a third of the world’s dairy exports.

Dairy produce makes up over a quarter of New Zealand’s NZ$48bn annual export earnings.

The co-op will hold a shareholder vote next week to approve a controversial fund which will tap outside investment. The plan aims to reduce redemption risk Fonterra faces when shareholders sell back their shares, and will free up capital for the company to use to expand its global operations.