NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Companies / Agribusiness

Panic buying hits global dairy trade

By Malcolm Burgess
19 Jun, 2007 05:00 PM3 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Fonterra chief executive Andrew Ferrier denied that high prices would burn off demand for dairy.

Fonterra chief executive Andrew Ferrier denied that high prices would burn off demand for dairy.

KEY POINTS:

"Panic buying" appears to have broken out in the global dairy trade as supply constraints ratchet prices up into uncharted territory, according to agricultural forecaster Agrifax.

The latest data from the NZX-owned rural information provider show prices for milk powders jumped 4 per cent, and butter leapt 10
per cent, in the past fortnight in US dollar terms. Some prices for skim milk powder hit almost US$5000 ($6628) a tonne - more than 2 1/2 times last decade's average of US$1900.

"There are signs of panic buying and a wide range of prices are quoted by various sources," Agrifax said. "This is totally uncharted territory."

But Fonterra chief executive Andrew Ferrier denied those giddy prices would burn off demand for dairy, insisting a small number of trades at those levels is nothing new. However he told the Business Herald the full impact on consumers would not be clear until the end of the year.

"We want to ensure that dairy prices are at a level that is not going to have a material impact on demand - we just don't know what that price level is yet."

News of the surge follows the European Union's decision last week to scrap its dairy export subsidies in a move expected to cut dwindling European dairy production further.

Demand for dairy plummeted following spikes in commodity prices in 2000 and 2001, resulting in a dramatic slump in dairy prices and reduced payout to Fonterra shareholders for the 2002 season.

But Ferrier, who heads the world's largest exporter of dairy products, says that was a result of "very different dynamics" - an oversupply of product as opposed to today's shortage.

"We think it's very different than previous cycles because global demand has been so strong, global stocks are at an all-time low and we think there is just not enough [in the way of] pricing dynamics out there to drive a substantial fall."

However he acknowledged that high prices increase supply and tend to reduce demand, so care was needed.

While Ferrier did not predict a "precipitous fall" after the boom, he expected that "over time dairy prices will soften from the current peak and settle at a more palatable level".

However in the next six to nine months he did not see much changing the current supply-demand dynamics behind the dairy boom.

The drought in Australia, increasing use of land to grow corn for biofuels in the US, and Westernised diets in rapidly developing regions such as Asia and the Middle East are driving a surge in dairy prices, and supply can't keep up with demand.

"They just need product," Agrifax founder and market analyst David Meares said. "And it's not there."

He expected the price rises would have some impact upon consumption, especially in less affluent countries.

However, he did not think there would be much impact on developed economies such as the EU and the US.

Although demand in the short term was "very inflexible", the longer-term outlook was less certain. "The consumer hasn't been tested yet," he said.

He said that since no one had predicted the meteoric rise in dairy commodity prices, forecasting when they would come down would be difficult.

If current prices hold, Fonterra's payout for the 2007/08 season could be $6 per kg of milk solids at the current rate of US75c to the kiwi dollar, and go even higher depending on Fonterra's hedging policy, Meares said. "At a US71c conversion, a payout of about $6.40 is possible."

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.
Save

    Share this article

Latest from Agribusiness

Premium
Agribusiness

$15b boost to NZ economy: Fonterra sets milk price forecast and earnings

28 May 09:15 PM
Premium
Agribusiness

A2 Milk silent on A$350m acquisition talk

27 May 12:37 AM
Agribusiness

'Surpassed a significant milestone': Zespri hits $5b in kiwifruit sales

21 May 09:53 PM

Why Cambridge is the new home of future-focused design

sponsored
Advertisement
Advertise with NZME.

Latest from Agribusiness

Premium
$15b boost to NZ economy: Fonterra sets milk price forecast and earnings

$15b boost to NZ economy: Fonterra sets milk price forecast and earnings

28 May 09:15 PM

Fonterra forecasts a milk price range of $8-$11 per kg for the 2025/26 season.

Premium
A2 Milk silent on A$350m acquisition talk

A2 Milk silent on A$350m acquisition talk

27 May 12:37 AM
'Surpassed a significant milestone': Zespri hits $5b in kiwifruit sales

'Surpassed a significant milestone': Zespri hits $5b in kiwifruit sales

21 May 09:53 PM
Premium
Dairy prices end NZ season on a flat note, will they stay high in 2026?

Dairy prices end NZ season on a flat note, will they stay high in 2026?

20 May 11:58 PM
Clean water fuelling Pacific futures
sponsored

Clean water fuelling Pacific futures

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • What the Actual
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven CarGuide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP