Anhydrous milk fat continued the downward trend, tumbling 2.2 per cent to US$5675/MT
Cheddar also dipped 0.7 per cent, to an average of US$4801/MT and butter slid 2.6 per cent to an average of US$4602/MT.
28,724 MT of product was purchased by 149 successful bidders, compared to 29,570 MT and 118 winning bidders last time.
Butter milk powder and sweet whey powder were not offered at this auction.
On December 8, Fonterra narrowed its forecast farmgate milk price for 2022/23 to a range of $8.50–$9.50 per kgMS, from $8.50–$10.00 per kgMS; with a lowered midpoint of $9.00, down from $9.25.
However, its forecast 2022/23 normalised earnings guidance range was lifted to between 50 to 70 cents, up from 45 to 60 cents.
Southland dairy farmer Dean Rabbidge retained a pragmatic outlook.
“It’s not altogether unsurprising, given the situation in China - as long as the next couple don’t drop,” he said.
“It is what it is. I hate that saying, but we just have to roll with it - as soon as the cows finish the grain they’re on now, that’s the end of it. Luckily we have a heap of baleage, so that might plug some gaps instead of grain.
“We’re just trying to counteract the anticipated fall in prices, by being really savvy with on-farm spend.”
Rabbidge remained focused on farm profit margins, saying he was willing to sacrifice a bit of production to try and maintain them.
“Otherwise you’re farming for free and we’ve gotta pay [increased] interest rates.
Fonterra’s chief executive Miles Hurrell said that, while the result was disappointing, the co-op’s payout was something for farmers to remain positive about this Christmas.
“I wouldn’t call us the Grinch,” he told The Country’s, Jamie Mackay.
“We’re still sitting there with a $9 forecast payout for the year, so that’s not bad when you look back through the years.”
Mackay said many commentators were saying this was under threat, however.
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Hurrell remained philosophical.
“That’s why we have the range of $8.50 to $9.50 because there are some downsides pictures that you can paint but at the same time, supply is still constrained, milk is back 2.5 per cent in New Zealand, that message, I don’t think, has got through the international markets.
“So you could paint a picture of an upside too later in the year, as buyers come off their seats because they’ve been quiet for a while.”
Reduced demand from China had affected previous auctions but Hurrell said this was starting to improve.
“Interestingly enough, they were the big buyers last night on GDT, so despite the fact the market was off ... we did see China come back as the larger buyer, so maybe there’s some signs of life there.”
Also in today’s interview: Hurrell talked about the weather, buyer uncertainty, the future for whole milk powder, and how 2022 shaped up for Fonterra.
