22 Nov 2017

Global dairy prices at 8-month low

1:05 pm on 22 November 2017

Prices have fallen again in the global dairy auction.

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Whole milk powder, butter and cheddar prices fell in the latest auction. Photo: RNZ / Rebekah Parsons-King

The average price fell 3.4 percent overnight to $US2970 a tonne.

It follows a 3.5 percent drop at the previous auction.

Prices have been ebbing since a strong recovery last year and are now at an eight-month low.

The price of whole-milk powder, which helps determine the payout to farmers, fell 2.7 percent to $US2778 a tonne. It is at its lowest level since October 2016.

The price of butter fell for the fourth consecutive auction to $US5144 a tonne compared to a record three months ago of over $6000.

Skim milk powder and cheddar prices also fell at the overnight auction and volumes of all commodities sold were down slightly.

Fonterra said yesterday milk production lifted 3 percent during peak production in October, following a wet winter and spring which had been keeping a lid on supply.

Analysts are expecting Fonterra to reduce its forecast payout before the end of the year from the current $6.75 per kilogram of milk solids.

ASB Bank is forecasting a lowered payout of $6.50 per kg/ms.

ASB rural economist Nathan Penny said local production had improved faster than expected, and better global production was also a factor in the lower payout forecast.

He said demand was strong in China and other parts of Asia.

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