Does latest fall at Fonterra auction hide positive signals?

Despite a slight reduction at the latest Fonterra Global Dairy Trade (GDT) auction, the event may hide key positive indicators for the dairy trade, according to DairyCo.

It says the latest 1.1% drop at the GDT auction on December 2 was largely influenced by the 7.1% reduction in Whole Milk Powder (WMP), while all other commodities showed strong increases compared to the previous auction.

DairyCo highlights that cheddar and butter are showing positive signs, with average weighted prices increasing from the beginning of November. It says the declining trend in Skimmed Milk Powder (SMP) prices appears to be slowing, potentially suggesting signs of stabilisation.

However, according to DairyCo, this is just an indication and it is too early to know whether these price signals are a sign of sustained change. It stresses that any significant switch in price direction will largely depend on whether a noticeable shift in the supply and demand situation occurs.

Global Dairy Trade dec
GlobalDairyTrade

Fonterra’s most recent dairy trade auction showed resulted average price standing at US$2,513/t, the lowest price since August 2009.

WMP averaged $2,229/tonne across all contracts, a decrease of 7.1% on the last auction.

At the auction the average weighted butter price was up 7.3% from the last auction, at $2,849/tonne. The weighted SMP price was also up 5.7% from the previous auction, at $2,423/tonne.

Prices for cheddar were up 5.2% on the last auction, at $3,017/tonne.

The previous trading, on November 18, was also back, by 3.1%.The next trading event is December 16.

Fonterra is currently holding its 2014-15 forecast milk price at $5.30/kgMS (kilos of milk solids), despite the recent fall in GDT price.

However, the processor is expected to revise this on December 9, according to DairyCo.

Please be considerate of others when commenting. All comments posted are subject to our commenting policy. Comments violating this policy will be removed without notice.