Demand softens further, prices fall in latest Global Dairy Trade auction

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Prices have fallen in the latest Global Dairy Trade auction, held overnight, with a 2.6 per cent decline across the board.

It is the third drop in a row, with the index falling 0.7 per cent on March 7 and 1.5 per cent on February 21.

Whole milk powder, which peaked in March last year at US$4757/MT, dipped 1.5 per cent to an average of US$3228/MT, while skim milk powder - Fonterra’s second-biggest reference product – dropped 3.5 per cent to an average of US$2648/MT.

However, the biggest percentage fall once again came from cheddar, which plunged 10.2 per cent to an average of US$4052/MT.

This is directly on the back of another 10.2 per cent fall in the previous event and means the product is now commanding US$1036/MT less than the US$5086/MT on February 7.

With all products on offer experiencing declines, anhydrous milk fat fell 3.8 per cent with an average of US$5150/MT and butter dropped 3.0 per cent to an average of US$4748/MT.

Figures for lactose and butter milk powder were unavailable and sweet whey powder was not offered at this event.

26,795 MT of product was purchased by 122 successful bidders.

On February 24, Fonterra reduced and narrowed its 2022/23 season forecast to $8.20 - $8.80 per kg of milksolids, with a midpoint of $8.50, due to softer demand out of China.

The previous forecast was in a range of $8.50 - $9.50 per kgMS, with a midpoint of $9.00.

Its forecast 2022/23 normalised earnings guidance was lifted last week to a range of 55 to 75 cents.