Fonterra has announced that prices at its monthly internet auction of milk powder overnight bounced 16.9% to a three month high.
This reinforces Fonterra's August 20 decision to hold its current forecast for a payout for the ongoing 2010/11 season of between NZ$6.90 to NZ$7.10/kg of milk solids, despite a 28% fall in the New Zealand dollar price of dairy products in the previous three months.
Fonterra said then it was seeing fresh signs of firm demand and bad weather in Russia and China was helping restrict supply from competitors.
Russia's imposition of a wheat export ban in August also increased grain prices, which makes it more expensive for grain-fed producers of milk for export in the Northern Hemisphere.
The news will bolster sentiment in a rural economy struggling with weak farm spending amid a general push to repay debt.
It's also a boost in the wake of the receivership of South Canterbury Finance.
Paul Grave, globalDairyTrade Manager, said the result appeared to indicate a firmer tone has returned to the market over the last month.
The next globalDairyTrade trading event will be held in two weeks’ time on 15 September as globalDairyTrade moves to two auctions per month.
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3 Comments
Great news for dairy producers who are not up to their neck in debt...for those who are, be happy that the bank will be happy and get back to work. Sorry to hear of your loss. The ponzi scheme was a good little capital gain earner while it lasted. We too hope the weather up in the top half continues to destroy crops because without that, the prices might well head south again.
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