Kiwi dairy farmers awoke to a small ray of light amidst the beginnings of a new Level 4 lockdown, as prices rose in the latest Global Dairy Trade auction, breaking a run of eight consecutive declines.
Across the board, the index lifted 0.3 per cent overall.
However, whole milk powder – which has the biggest influence on Fonterra’s farmgate milk price – fell 1.5 per cent to an average US$3552 (NZ$5040) a tonne, following a 3.8 per cent decline at the previous auction.
Fonterra chief executive Miles Hurrell said he was not concerned by the drop in whole milk powder.
“The stock positions for our customers around the world are relatively balanced, so there’s probably a couple of people hanging on just to see where that market will go,” Hurrell told The Country’s Jamie Mackay.
China wasn’t “in big consumption mode” at this time of year either, Hurrell said.
“China’s consumption is really in that post-Christmas, January, February, and into the Chinese New Year period so we haven’t seen that buying start yet.”
Meanwhile skim milk powder – Fonterra’s second biggest reference product – rallied 1.1 per cent to an average US$3052, a further gain from the 1.5 per cent lift last auction.
This “good news story” reflected the premiums Fonterra was getting above its competitors in the Northern Hemisphere, Hurrell said.
“This shows that customers are prepared to pay for what our farmers do behind farm gates.”
Butter gained 4.0 per cent to an average US$4711/MT, while cheddar was up 2.8 per cent with an average US$4184/MT.
Anhydrous Milk Fat rose 1.5 per cent to an average US$5791/MT, and lactose, which was down 3.1 per cent to an average US$1094/MT at the last auction, moved 0.0 per cent to an average US$1097/MT.
Butter Milk Powder and Sweet Whey Powder were not offered at this event.
The volume of product traded dropped from the previous event’s total of 24,084 MT, to 22,543 MT of product sold to 180 successful bidders.
A drop in volume indicated demand outside the GDT auction was still going strong, Hurrell said.
“We’ll take product off if we can sell it outside of the platform. Making sure we of course keep liquidity on the platform, so it becomes a viable place for buyers to go.”
Also in today’s interview: Hurrell talked about how Fonterra was dealing with the Level 4 lockdown.