Prices had been historically high before China cut global demand to use stockpiled product. Photo / Christine Cornege
Prices had been historically high before China cut global demand to use stockpiled product. Photo / Christine Cornege
Current dairy commodity prices are now well below "fair" expectations of price among global dairy producers, says Fonterra's chief executive Theo Spierings.
Speaking on TV3's The Nation, Spierings said his discussions with other global dairy companies and milk traders suggested around US$3500 per tonne of milk solids is seen as"very fair".
"It's well below that now," he said. The current global index price of US$2640 a tonne was set in the last GlobalDairyTrade auction, on October 15, when global dairy commodity prices improved slightly after a precipitous halving of value since the start of the year.
Prices had been historically high before China cut global demand to use stockpiled product.
Chinese demand was expected back at closer to historic volumes of demand from December, with prices recovering in the next "four to six months", Spierings said, based on Fonterra forecasts.
With the payout per kilogram of milk solids cut to $5.30 for the coming season, from a record $8.65 per kg/ms in the previous season, Spierings conceded further falls could see him looking at a payout figure "starting with a 4", but wasn't expecting it.
