Milk powder prices slump

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Whole-milk powder prices slid to the lowest level in 13 months after Northern Hemisphere producers boosted output.

Powder for November delivery fell to US$3235 a tonne, the lowest level since August last year, from US$3359 three weeks earlier, at Fonterra's GlobalDairyTrade online auction.

The near-term contract fell 3.3 per cent, according to a trade-weighted price index from the company.

Whole-milk powder has slumped 35 per cent since reaching a record US$4958 a tonne in March as high prices spurred farmers in the United States and New Zealand to boost output.

Declining prices may help cap global food costs that rose in June for the 10th time in the past year, staying near a record reached in February.

"It's largely due to an increase in production, particularly in the Northern Hemisphere, over the last several months and some of that supply's come on to international markets," said Con Williams, rural economist at ANZ National Bank in Wellington. "Subject to weather being normal over the production period, you're probably unlikely to see a huge spike up in prices" similar to the one seen this year.

Milk production in the US gained 0.7 per cent in July from a year earlier to 7.508 billion kg, according to the US Department of Agriculture.

Output in New Zealand might increase 5.7 per cent in the 2011-2012 season, the Ministry of Agriculture and Forestry said in June.

- Bloomberg