Prices rise 2.4% at Fonterra Global Dairy Trade auction

Fonterra’s Global Dairy Trade for dairy products saw prices rise by 2.4% in the latest auction, which took place today.

The rise comes following Fonterra’s previous recent dairy trade auction showing a 1.1% decrease in the overall auction index meaning average price for all products was the lowest price since August 2009.

However, today’s trade yielded a much more positive result for dairy products.

Cheddar, AMF (Anhydrous Milk Fat), butter, casein and Whole Milk Powder (WMP) showed an increase in price index compared to the previous auction.

In contrast, the Fonterra price index for SMP (Whole Milk Powder) declined. WMP averaged $2,320/tonne across all contracts, a decrease of 3.1% on the last auction.

At the auction the average weighted butter price was up 10.4% from the last auction, at $3,145/tonne. The weighted WMP price was also up 1.4% from the previous auction, at $2,270/tonne.

Prices for cheddar were down .6% on the last auction, at $3,002/tonne.

The previous trading, in early December, was back, by 1.1%.The next trading event is January 6.

Last week Fonterra reduced its forecast farmgate milk price for the 2014/’15 season from $5.30/kg MS to $4.70/kg MS (€37c/kg)

When combined with the previously announced estimated dividend range of NZ$ 25-35c/share, this amounts to a forecast cash payout of $4.95 – $5.05 for the current season.

Chairman John Wilson said that although dairy farmers were expecting this lower forecast, the revision will put pressure on their farming business budgets.

“There is still considerable volatility in global dairy markets,” he said.

“Right now we are seeing a number of factors that are delaying a sustained return to higher global prices.”

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