Whole milk powder price up 3.6% in Fonterra internet auction (Update 1)

The average whole milk powder price at Fonterra's latest internet auction rose 3.6% to US$3,560/tonne overnight from a month ago. The average price is now up 95% from its low in July. (Update 1 includes Fonterra statement.) Fonterra's globalDairyTrade manager Paul Grave said the market continued to be underpinned by tight supply conditions. Grave said while the outlook for whole milk powder prices remained positive, Fonterra is expecting more volatility in supply and demand responses to the 95% increase since July. Here is the full release from Fonterra this morning:

globalDairyTrade, Fonterra's internet-based sales platform, concluded its December trading event this morning (NZT) 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 said. "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. The next globalDairyTrade trading event will be held on January 5, 2010.