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Dairy prices surge at latest auction - NZ's Fonterra
Reuters - Wednesday, September 2
WELLINGTON, Sept 2 - New Zealand's Fonterra Cooperative Group, the world's top dairy exporter, said international dairy prices rose 24.2 percent at its latest auction, extending the rise from August.
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Fonterra said the average selling price for whole milk powder in an Internet auction on Wednesday was $2,858 a metric tonne, up $557 per tonne on a month ago.
That compared with a 26 percent rise in August, after prices had fallen in the previous three auctions.
Kelvin Wickham, Fonterra Global Trade managing director, said in a statement the lift was higher than expected.
"We anticipated whole milk powder prices would lead the recovery because of low global inventories and firming demand," he said in a statement.
"With demand returning, our customers have more confidence in refilling their supply chains. But it remains to be seen whether demand has returned to sustainable growth," Wickham added.
Full details of the auction are available at www.globaldairytrade.info.
The auctions offer a one-month contract with delivery starting two months after the auction, and two three-month contracts with three- and six-month delivery dates. The next auction will be held on Oct. 6.
In July, Fonterra maintained its forecast payout to its dairy farmers of NZ$4.55 a kilo of milk solids in the 2009/10 season, saying there were signs of improving markets, though a higher New Zealand dollar <NZD=> was offsetting the gains.
It paid a record NZ$7.90 a kilo in the 2007/08 season, and is expecting to pay NZ$5.20 in the current season.
Dairy products account for around a quarter of New Zealand's export earnings, which touched NZ$42.8 billion ($28.9 billion) in the year to July 31.
Fonterra is owned by nearly 11,000 farmers and controls about a third of the world's dairy exports. It generates more than 7 percent of New Zealand's gross domestic product and has annual sales of around NZ$17 billion.
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