Dairy Demand Drops in Heat of Economy

NEW ZEALAND - The December trading event for Fonterra’s internet-based sales platform resulted in a further reflection of market softening in international dairy prices.
calendar icon 4 December 2008
clock icon 1 minute read

The trading manager, CRA International, advised Fonterra that the average price achieved across all products and contract periods for Whole Milk Powder (WMP) was US$2,223 per tonne FAS New Zealand Port. This was 14 per cent lower than for the previous trading event in November. Prices ranged from US$2,045 per tonne FAS to US$2,455 per tonne FAS.

“The current economic crisis has resulted in a significant drop in the demand for dairy commodities, and a continued decline in prices was expected,” said Guy Roper, Fonterra’s Commercial Director of GlobalTrade. “There will continue to be downward pressure on prices, until either the supply of product declines, or buyers have confidence that the global economic situation will improve.”

Since July, WMP prices are down 49 per cent. During the same period, the United States Department of Agriculture has reported a 45 per cent decline in EU Skim Milk Powder (SMP) prices.

The prices of other agricultural commodities have fallen by similar amounts. Since their mid-year peaks, the prices of barley, maize, soybean meal and wheat have fallen between 40 per cent and 55 per cent.

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