Wednesday 7th April 2010 |
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The price of whole milk powder unexpectedly surged to a 21-month high in Fonterra Cooperative Group's online trading auction, outstripping gains in US dairy prices.
The average price for whole milk powder jumped 21% to US$3,969 a tonne, according to the globalDairyTrade website managed by CRI International, from a month earlier.
That's the highest level since the first auction in July 2008, and more than double last year's trough in July.
It followed yesterday's data release showing a record high reading on the ANZ Commodity Price Index for March.
"USDA (US Department of Agriculture) dairy prices showed a slight increase, but nothing of that size, while futures prices on the CME (Chicago Mercantile Exchange) flat-lined," said Khoon Goh, senior markets economist at ANZ New Zealand.
"The jump was a big and pleasant surprise."
The gain was the second this year, after last month's 0.8% gain, though dairy prices dropped 1.2% on the ANZ commodity index last month.
Paul Grave, globalDairyTrade manager, said demand was strong across all products, and reflected tighter supply as Australia and New Zealand product nears the end of its season.
The average price for anhydrous milk fat jumped 22% to US$4,827 per tonne, its highest level since it began trading on the platform, while skim milk powder surged 26% to US$3,672 a tonne in its second event.
ANZ's Goh said the auction was a "very strong result across all three powder prices and across all time frames."
New Zealand exports of milk powder, butter and cheese arrested their decline in February, gaining 2.5% to $757 million from the same month a year earlier, though casein and caseinates tumbled 40% to $55 million over the same period.
Dairy products account for some 22% of New Zealand's $39.5 billion worth of exports.
Businesswire.co.nz
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