Fonterra sees “stability” in dairy prices

Posted by Nicole Eckersley on 25th March 2010

Fonterra, the world’s largest dairy exporter, yesterday insisted it was seeing “stability” in dairy markets after low commodity prices weighed on half-year revenues.

The company booked a 3.7% fall in sales to NZ$7.7bn (US$5.4bn) for the six months to the end of January due to “lower average selling prices”.

However, growing consumer confidence boosted volumes, CEO Andrew Ferrier said. “This led to an increase in product sales, meaning our inventory levels were also at more normal levels compared with the unusual highs of a year earlier, during the worst of the financial crisis,” Ferrier said.

Dairy prices remain volatile but Ferrier said there had been “recent signs” of stability returning to the market.

Over the past five months to March, average selling prices for whole milk powder on Fonterra’s globalDairyTrade platform have stayed within a narrow band of around US$3,250 to US$3,600.

“Although there is an element of uncertainty as to how supply and demand factors will influence prices, the recent stability means the outlook is positive for the balance of this year and into 2010/11,” Ferrier said.

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