Reuters logo
UPDATE 1-Dairy prices fall, volumes drop at auction -NZ's Fonterra
October 20, 2015 / 8:03 PM / 2 years ago

UPDATE 1-Dairy prices fall, volumes drop at auction -NZ's Fonterra

WELLINGTON, Oct 21 (Reuters) - International milk prices
slipped in the second auction held this month by New Zealand's
Fonterra Co-operative Group, the world's biggest dairy exporter,
a disappointing outcome that knocked the New Zealand dollar
lower.
    Fonterra's GDT Price Index dipped 3.1 percent to an average
selling price of $2,735 per tonne, the first decline following
four consecutive increases that drove the index up 62.8 percent.
    Prices for whole milk powder dropped 4.6 percent.
    "We'd anticipated some consolidation," said Raiko Shareef, a
currency strategist at BNZ. "Over the medium term though, we
still expect prices to recover, as the El Nino weather pattern
bites into production."
    The recent rebound had offered hope that the dairy market
was stabilizing after prices slumped to their lowest in over 12
years in early August. That was caused in part by slowing growth
in China and some emerging countries, which had cooled demand.
    Dairy is New Zealand's top export earners, and investors
reacted to the latest auction result by selling the kiwi dollar,
which slid to a one-week low of $0.6736. 
    "At present, prices remain consistent with Fonterra's
NZ$4.60 per kgMS 2015/16 milk price forecast, but if predictions
of an El Nino event come into fruition, prices could move up
sharply in the New Zealand summer months," analysts at ANZ wrote
in a note to clients.
    El Nino is a warming of ocean surface temperatures in the
eastern and central Pacific that occurs every few years,
triggering heavy rains and floods in South America and scorching
weather in Asia and as far away as east Africa. The current El
Nino pattern is shaping up to be one of the worst in 65 years.
    Fonterra, known for brands such as Anchor, Anlene and Fresh
n' Fruity, said a total of 34,519 tonnes was sold at the latest
auction, falling 2.1 percent from the previous one.
    The auctions are held twice a month, with the next one
scheduled for Nov. 3. Results can be found on the cooperative's
website www.globaldairytrade.info.
    The New Zealand milk co-operative, which is owned by about
10,500 farmers, controls nearly a third of the world dairy
trade.

 (Reporting by Ian Chua in Wellington and Bengaluru Commodities
desk, editing by Larry King)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below