International dairy prices are continuing to fall, although the rate of decline is starting to ease, according to New Zealand’s Fonterra.
The world’s biggest dairy exporter, which held an Internet auction concluding today (7 January), said the average selling price for whole milk powder (WMP) was US$2,017 per tonne, down 9.3% on last month.
Prices ranged from $1,920 per tonne to $2,140 per tonne. Spot prices rose 1.3% above those for the December trading event.
“This result reflects current trading conditions,” said Kelvin Wickham, managing director of Fonterra’s GlobalTrade unit. “Dairy prices have fallen as a result of a cyclical lag between supply and demand responses, though this has been accelerated by the demand downturn resulting from the global financial crisis and recession.
“Still, the spot price increase is encouraging and we hope this is a sign of things to come. Our own supply and demand analysis indicates that we are near the bottom of the price cycle. While global inventories still need to be worked through, the current price levels represent excellent buying.”
Since July, WMP prices have fallen 54%, within the range of decline for other dairy commodities. During the same period, globally-traded cheese, butter, casein prices have all fallen by between 45% and 55%.
A survey from ANZ Bank today showed dairy prices in New Zealand recorded large falls in December, dropping in excess of 12%. “Dairy prices are now at the level they were two years ago, before the start of the much-heralded surge 18 months ago,” ANZ said.
ANZ also claimed that every commodity, except apples, recorded a fall in December, representing the broadest monthly drop in commodity prices measured across the New Zealand export basket since 1986.