Global Dairy Trade auction: Prices drop again in latest event

Prices fell 4.6 per cent across the board in the latest GDT auction. Photo / Supplied

Prices dropped in last night’s Global Dairy Trade auction, continuing the downward trend from the previous event.

The average price at the fortnightly sale fell 4.6 per cent to US$3723/MT.

Butter lost a further 2.6 per cent from its 7.0 slide in the last auction and is now at US$4851/MT, a far cry from the US$7086/MT it commanded in March.

Whole milk powder (WMP) - which has the biggest influence on Fonterra’s farmgate milk price, dropped 4.4 per cent to an average of US$3421/MT.

Skim milk powder (SMP) - Fonterra’s second-biggest reference product – plummeted 6.9 per cent to an average of US$3250/MT.

Anhydrous milk fat (AMF) fell 2.7 per cent with an average of US$5661/MT.

Cheddar, which gained 2.1 per cent two auctions ago, fell 3.9 per cent in this event, to an average of US$4769/MT.

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

29,402 MT of product was purchased by 146 successful bidders, compared to 30,852 MT and 125 winning bidders last time.

In September, Fonterra announced a final 2021/22 payout of $9.50 per kgMS, with a total dividend of 20 cents a share.

The co-op’s forecast for its 2022/23 farmgate milk price range remains at $8.50–$10.00 per kgMS, with a midpoint of $9.25 per kg.

Its forecast 2022/23 normalised earnings guidance is in a range of 45 to 60 cents.

There were still positives to take away from the result, despite the drop, Fonterra’s chief operating officer Fraser Whineray said.

“The good news I think is that it’s another circa $200 million of export income for the country and more nutrition for our customers,” he told The Country’s Jamie Mackay.

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However, Whineray said the result was “a bit bearish” compared to what the co-op was expecting.

“I think it shows there’s a lot of inflation pressures in various parts of the world, there’s a lot of recession fears [and] volatility in the news cycle around Ukraine.”

There was also “a fair bit of currency volatility” around the world, Whineray said.

Despite this, he said the medium-term outlook was still “very good”.

Also in today’s interview: Whineray talked about how reduced volume at this event, along with European energy prices had affected the result. He also said it was too early in the season to change the milk forecast price.