Prices rebound at latest Fonterra auction

By Guy Montague-Jones

- Last updated on GMT

Related tags: Milk powder, Milk, Fonterra

Prices at the Fonterra globalDairyTrade auction have rebounded after two successive months of decline, suggesting renewed firmness in the market.

Following a 13.7 per cent fall at the July event and an 8.3 per cent drop in August, this month the gDT-TWI index, which covers anhydrous milk fat, skim milk powder and whole milk powder, was up 16.9 per cent.

Firmer tone

Paul Grave, globalDairyTrade Manager, said the result appeared to indicate that a firmer tone has returned to the market over the last month.

In the latest results, whole milk powder (WMP) prices rose most strongly, with the average price in NZ$ per tonne across all contracts going up 18.8 per cent. The increase was most pronounced in the result for the shortest term November contract, with prices up 24.9 per cent.

Previously, prices had dipped amid increasing supply and an uncertain economic outlook, according to Grave. New Zealand moved into its “spring flush” peak production period and there had been fears that demand was not robust enough absorb the increased supply. These concerns were exacerbated by the strength of the New Zealand dollar.

Bimonthly auctions

After the latest trading event, Fonterra said the company will be introducing bimonthly auctions starting in two weeks on 15 September.

“Having two events a month will provide a lot more visibility when it comes to assessing the market direction,”​ said Grave.

Fonterra said it continues to explore opportunities to have other leading dairy companies participate on the globalDairyTrade platform. It remains hopeful that new sellers will be added to the platform sometime in 2011.

Related topics: Manufacturers, Fonterra, Pricing Pressures

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