Fonterra reports continued momentum in dairy market

Posted by James Ferre on 2nd December 2009

Fonterra has seen continued strength in milk prices via their internet-based sales platform, a further sign that the dairy market is recovering.

The New Zealand dairy giant concluded its globalDairyTrade December trading event this morning with the average price for Whole Milk Powder up 3.6%.

The trading manager, CRA International, advised Fonterra that the average price achieved across all contracts and contract periods for Whole Milk Powder (WMP) was US$3,560 per tonne FAS. This was US$123 per tonne higher than the November event. Prices ranged from US$3,370 per tonne FAS to US$3,760 per tonne FAS.

Paul Grave, globalDairyTrade manager, said the market continued to be underpinned by tight supply conditions.

“However, the economic outlook is still relatively fragile. A sustained recovery is reliant on strong consumer demand,” Mr Grave advised. “WMP prices have risen by 95% since July. While the outlook remains positive, we expect more volatility as a result of supply and demand responses to this large price increase.”

For Anhydrous Milk Fat (AMF), the average price achieved across all contracts and contract periods was US$4,349 per tonne FAS. Mr Grave said AMF pricing had come off slightly from historic highs.

Overall pricing increased 1.9% across both AMF and WMP.