Fonterra auction defies pessimistic pundits on milk prices
Dairy prices did not drop as much as expected. On the contrary, whole milk powder prices fell by only 1.6%, remaining 76% higher than the February 2009 average.
The Fonterra auction is seen as a reliable reflection of the global market.
And next month’s auction will be even more revealing, with the inclusion of skim milk powder, a key product in Europe.
Fonterra sources said the result was positive, and showed the market had reached a balancing point, with previous gains retained.
Meanwhile, falling milk deliveries have been confirmed in the main production countries.
Fonterra expects to collect 0.8% less milk in the current New Zealand season, which ends in May.
Production in Australia for the 2009/10 year is trailing last year’s figures by 5.4%.
US milk production 0.4% in 2009, and is projected to decline by a further 0.5% in 2010.
Milk output in the EU-27 from January to October in 2009 was 2% lower than the previous year.
Nevertheless, international and EU markets for dairy commodities had a weak start to the new year.
Market activity was slow, with buyers uncertain and holding off to see if prices fall further.
With global dairy output seasonally rising into the spring, price pressures may grow.
