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Fonterra Auction Confirms Robust Global Demand, Prices for Butter, Powders

10 February 2014

IRELAND - Commenting on the results of the recent Fonterra auction, the first for February and involving trading contracts to August 2014, IFA National Dairy Chairman Sean O’Leary said that the weighted average 0.5 per cent price lift was due to robust butter and powder prices for trade up to June, reflecting solid continued global demand for those products.

Mr O'Leary said that, at a time when co-op boards will be meeting to review milk prices for January and for the year ahead, this should give them confidence that current milk price levels are well sustainable for 2014.

"Over the last few auctions, the butter price has been increasing steadily. This is particularly welcome, as it is reducing significantly the gap with higher, but now easing, EU prices, auguring better in terms of future butter price evolution when the EU peak begins," Mr O’Leary said.

"When it comes to powder, there is no such price gap, and EU exporters, including Ireland, are benefiting from the rises seen in global and average EU SMP prices (€3290/t on 26th January – that’s 23 per cent higher than 12 months ago)," he said.

"Fonterra is reported to have significantly increased volumes of powder available this time around, and still the market absorbed it at a 1.4 per cent higher (WMP) or unchanged (SMP) price," he said.

"Some of the commodity prices, which had increased substantially in recent months, eased somewhat, with Cheddar, Rennet Casein and Milk Protein Concentrates between 3 and 4 per cent cheaper than at the last auction," he added.

"However, the outlook for the commodities most traded through the auction remains strong, as global demand stays solid, even in the face of fast rising world dairy output," he said.

"I believe co-op boards, who will be meeting in coming days to decide on January milk, and will also review the outlook for the year, ought to give farmers a confidence boost by declaring clearly that they will hold 2014 milk prices," he concluded.

TheCattleSite News Desk



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