Story image

Dairy product prices slide on supply concerns

02 Apr 2015

Dairy product prices declined in the latest GlobalDairyTrade auction, led by a slump in prices for butter milk powder and whole milk powder, amid concern about an increase in supply.

The GDT average winning price dropped 10.8 percent to US$2,746, down from US$3,136 at the previous auction two weeks ago. Some 23,162 tonnes of product was sold, up from 20,258 tonnes two weeks ago.

The AgriHQ Seasonal Farmgate Milk Price for the 2014-15 season decreased by 10 cents per kilogram milksolids to $4.54/kgMS following the GDT auction. This is comparable with Fonterra's $4.70 per kg milksolids forecast.

"The fall in dairy commodity prices is being driven by both local and global factors," AgriHQ dairy analyst Susan Kilsby said in a note. "Locally by an increase in the volume of milk that Fonterra expects to collect this season and a subsequent increase in the volume of product available to sell on GDT has reduced the urgency for buyers to strongly participate in the auctions."

Last week Fonterra advised it would be placing an additional 6,230 tonnes of whole milk powder into the GDT auctions held during the April to June period, according to Kilsby.

"Meanwhile in the international market the removal of the European Milk Quotas is expected to increase the world's supply of milk. Already some Europe companies are targeting Asian markets with dairy products that compete with those supplied from New Zealand," Kilsby said.

"While the total increase in milk from Europe is not expected to be huge, the exact size of the increase is unknown and it is this uncertainty that is making market participants nervous," she added.

Butter milk powder plunged 25.1 percent to US$2,130 a tonne, and whole milk powder sank 13.3 percent to US$2,538 a tonne.

Cheddar dropped 10.5 percent to US$2,787 a tonne, skim milk powder slid 9.9 percent to US$2,467 a tonne, while rennet casein fell 8.0 percent to US$6,980 a tonne.

Butter fell 7.6 percent to US$3,259 a tonne, while anhydrous milk fat retreated 5.3 percent to US$3,663 a tonne.

Lactose and sweet whey powder were not offered at the latest event.

The New Zealand dollar last traded 0.2 percent lower at 74.59 US cents at about 2:02pm in New York, compared with 74.70 US cents at 5pm in Wellington on Wednesday.

There were 96 winning bidders out of 127 participating bidders at the 11-round auction. The number of qualified bidders inched higher to 669, up from 667 at the last auction.

Chch crypto exchange Cryptopia facing liquidation
It seems that Christchurch-based cryptocurrency exchange Cryptopia has been unable to recover after malicious cyber attackers stole around $20 million worth of cryptocurrency.
Adobe & Amazon: Making merchants' stores a lot more powerful
Magento Commerce branded stores for Amazon sellers features native integration with Amazon merchant tools including Amazon Pay and Fulfillment by Amazon. These provide the convenience of secure payments and speedy shipping services for buyers.
Four NZ projects shortlisted in IDC's APAC Smart Cities Awards
The annual awards highlight and acknowledge outstanding smart city initiatives in the Asia Pacific region and this year attracted over 180 entries.
How Chorus aims to reshape service company maintenance contracts
“These contracts are the first step in moving Chorus beyond the major UFB network build."
Mind Lab at MOTAT hosting event to promote young women in tech
Gender diversity in the tech industry is a hot topic around the world, but it’s one that New Zealand is looking to tackle head on.
SOLD: Infratil & partner snap up Vodafone NZ
Brookfield Asset Management and Infratil will hand over NZ$3.4 billion to acquire Vodafone New Zealand.
Noise pollution is the new second-hand smoke
ow loud is our phone call? Can you hear your co-worker’s music through their headphones? Do you need to have that meeting in a public area of the office?
Infratil throws its hat into the buyer's market for Vodafone NZ
Vodafone has been through a turbulent time lately, after the threat of staff redundancies, constant fines from the Commerce Commission, and the addition of Vodafone CEO Jason Paris late last year.