Average milkpowder prices fell again today on Fonterra's regular monthly internet auction, slipping more than 4 per cent to erode all the gains made in April.
Until today, average prices at the auction had risen for two months in a row, after a lengthy period of decline.
Fonterra's auctions sellmilkpowder on a range of contracts, including a one-month contract with delivery starting two months after the sale, and two three-month contracts with delivery starting three and six months later.
Last month the average selling price for whole milkpowder rose 3.5 per cent to US$2235 ($3739) a tonne, following a 16.6 per cent rise in early March.
Today the average price paid across all products and contract periods was US$2144 a tonne, 4.1 per cent lower than in April.
But Nigel Kuzemko, director of "portfolio optimisation" for the Fonterra global trade operation said prices ranged from US$2085/tonne to US$2220/tonne, with prices for contracts with short-term delivery rising.
Milk powder for July delivery rose to an average of US$2168/tonne, 1.6 per cent up on the June price set last month. It was the fourth rise for that segment of the auction in the 10 months since the auctions began, though prices have fallen 50 per cent since the first sales.
But the contracts for delivery between August and October dropped 6.9 per cent to US$2162 a tonne, and those for export between November and January sold at US$2113/tonne, down 6.3 per cent.
The mixed prices showed the market remained cautious as the global recession continued to weigh on consumer demand, Fonterra said.
"Today's result confirms our expectation that dairy markets will be characterised by increased uncertainty in the future and we expect prices will continue to cycle around current levels," said Kuzemko.
He said the internet auction in the early hours of today attracted strong international interest and a record number of participants.
Fonterra's scheduled May auction at the start of the month was postponed to today because of technical difficulties.
The next internet auction will be held on June 2.
Fonterra is the world's largest dairy exporter, with annual revenues of about $17 billion and trades in 140 countries.
