Dairy prices up 14.8%

Just one rise after five months of falls but the latest dairy auction gives a little hope that the steep decline may have bottomed out. 14.8% is a significant turnaround.

Radio NZ reports Dairy price rise after months of losses:

Dairy prices have risen an average 14.8 percent in the fortnightly GlobalDairyTrade auction overnight, ending a five-month run of losses.

It is the first rise in the dairy price index since March.

The benchmark whole milk powder price has risen by 19.1 percent, to $US1856 ($NZ2820.68) a tonne.

The overall average price for dairy commodities has come in at $US1974 a tonne.

The amount of product put up for auction dropped by 9623 metric tonnes offered at the previous auction a fortnight ago to 36,904 metric tonnes.

That gives the dairy industry and the New Zealand economy some hope after a run of bad news.

At least it has temporarily stemmed a depressing decline.

DairyAuctionTrendAug2015

DairyAuction10YrTrendAug2015

Source: GlobalDairyTrade

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6 Comments

  1. Smart not to place as much volume in the Auction…. Hopefully this sees the start of a retrace of the price action back up to a level that allows Fonterra to declare a $4.50 a kg/ms payout for the current season which would allow those competent farmers to tick over and drive the johnny come latelys needing $6 kg/ms or more out of the business

    One thing to remember about long run markets for products, shares etc that are solid on going parts of the economy, sans a serious long term structural change, that sell offs often overshoot as do run ups in price. Seeing the structural changes is the key to managing successful

    Human nature in crowds is such that the good times and rising prices never end and the down turns and falling prices will never end – hubris and panic are the two faces of the market. Steer the middle course and base your decisions on long run fundamentals and generally you will do ok.

    Reply
  2. Pull the udder one

     /  19th August 2015

    So, Fonterra holds back 33% of production to achieve a 15% rise in the price. Could we expect the price to rise a further 15% in the next auction if volume was cut by another third?

    The question I have, is how does Fonterra sell the 33% they did not auction – or does that just go into storage somewhere?

    Reply
    • Alan Wilkinson

       /  19th August 2015

      I presume not all product is sold at auction. Therefore Fonterra can point to the auction price as a guideline when offering private sales.

      Reply
  3. John Schmidt

     /  19th August 2015

    Of course Labour declaring a crisis has helped as with all their other declarations.

    Reply
  4. RightOfGenghis

     /  19th August 2015

    “China building 100,000-cow dairy unit to supply Russian market”.
    Be afraid. Be very afraid!

    Reply
  5. kittycatkin

     /  19th August 2015

    Yes, but they’ll need 100,000 cows to fill it, and we may well be one of the moovers* and shakers for that.

    *sorry, that just said itself. Dairy me !

    Reply

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