Wholesale milk powder price jumps 26% in Fonterra auction; Kiwi$ jumps (Update 1)

The average price of wholesale milk powder in Fonterra's internet auction for August was US$2,301, up 26% from July's price, said internet auction firm globalDairy Trade. (Update 1 with currency reaction.) Ironically, the result pushed the Kiwi dollar up half a US cent above fresh highs to over 67 US cents. "We are seeing signs of strengthening demand and prices, and that's encouraging, but the market remains dynamic with trends difficult to forecast," said Nigel Kuzemko, Director Commercial and Strategy, Fonterra Trade and Operations.

The August trading event this morning (NZT) for Fonterra's internet-based sales platform, globalDairyTrade, saw average prices for Whole Milk Powder rise 25.8%. 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$2,301 per tonne FAS. This was US$472 per tonne higher than the July event. Prices ranged from US$2,235 per tonne FAS to US$2,530 per tonne FAS. The August trading event included for the first time 1,000 tonnes of WMP from Fonterra's Australian operations. Nigel Kuzemko, Director Commercial and Strategy, Fonterra Trade and Operations, said it was encouraging to see improved pricing which reflects a recent firming in market sentiment. The international dairy market remains volatile "“ with supply and demand going through a rebalancing phase. "We are seeing signs of strengthening demand and prices, and that's encouraging, but the market remains dynamic with trends difficult to forecast." The inclusion of Australian product in this month's event was in line with Fonterra's objective to expand the range of products sold on globalDairyTrade. Mr Kuzemko said: "This will bring the same market price transparency for Australian product that globalDairyTrade trading events have established for New Zealand product. Ultimately this is about providing greater choice for our customers and, in today's volatile market, ensuring the best returns for our farmers."