International dairy prices dropped to levels not seen since May 2012 at the GlobalDairyTrade (GDT) auction last week, resulting in a fresh wave of selling in an already weakened New Zealand dollar.
The price of wholemilk powder fell by 10% to US$2443 a tonne since the last auction two weeks ago. Fonterra had recently revised its forecast farmgate milk price for 2014/15 to $5.30 a kg of milk solids from a previous forecast of $6.00 a kg. The cooperative said then that wholemilk powder prices would need to reach US$3500 a tonne by March next year if the forecast was to be achieved.
The price of skimmed milk powder – an important line for the country’s second biggest dairy co-operative – Westland Milk – fell by 2.7% to an average price US$2,540 a tonne.
Price falls were announced across the board, including buttermilk powder prices and sweet whey powder prices. Many dairy farmers in New Zealand will be barely covering costs of production at present levels.
It is believed that the prices are affected by stocks of dairy commodities building across the globe due to Russia’s current ban on importing dairy products from many Western nations, and a lack of urgency from Chinese buyers, while at the same time global milk supplies are expanding.
