Global Dairy Trade auction prices fall again, whole milk powder down more than 4%
The average price index at the New Zealand-based Global Dairy Trade auction fell 2.4%, with whole milk powder down 4.2%. Slowing Chinese purchases and steady Australian supply produced the third consecutive auction decline.
All product categories continued the downward trend that has lasted six weeks, with butter down 1.7% and cheese 0.8% softer. The total volume on offer at the auction stood at 22,300 tonnes. Fonterra's investor relations chief told RNZ that Chinese buyers were managing year-end stocks more cautiously and that the new customs regime was also having an effect.
Fonterra shares on the NZX fell 1.3% and the lower opening pushed the New Zealand dollar marginally weaker against the U.S. dollar in a narrow band. Officials at the agriculture ministry said the milk-solids payout forecast would be reviewed in July to help farmers protect cashflow. The current forecast stands at NZ$9.40 per kilogram.
Milk-price pressure is also putting payments from Bega Cheese and Saputo Dairy Australia to farmers under fresh scrutiny. The sector's global average export price index is 11% lower than its April peak. The next Global Dairy Trade auction will take place on July 1.
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