Prices in last night's Global Dairy Trade auction have decreased yet again, this time by 1.7 per cent across the board. The fall marks the third slide in a row after a mammoth 8.3 per cent leap on July 7 and comes hot on the heels of a 5.1 per cent drop earlier this month.
Whole milk powder prices, which have the greatest bearing on Fonterra's farmgate milk price, fell by 2.2 per cent to US$2,936/tonne.
All products on offer weakened, except skim milk powder - the second biggest "reference" product for Fonterra, which rose 1.1 per cent to an average price US$2,608/tonne. This follows a 4.6 per cent plumment in the previous auction on August 4.
The largest fall in the main commodity groups was cheddar, which dropped by 3.6 per cent to US$3,442/tonne.
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Results for other main commodity groups included a drop of 2.9 per cent to US$3,873/tonne for anhydrous milk fat (AMF) and butter, which decreased 2 per cent to US$3,370/tonne.
Fonterra chief executive Miles Hurrell said there were no surprises in the latest results.
"We'd call that a neutral result from our perspective," Hurrell told The Country's Jamie Mackay.
Listen to the full interview on The Country below:
While there had been a significant increase in volumes, Hurrell said it was important to keep an eye on the softening of some key products, but overall he was still "very comfortable with the year ahead."
An increase in supply didn't worry Hurrelll as there was "still plenty of demand out there," despite global uncertainty due to Covid-19.
In a market update on July 17, Fonterra lowered the midpoint for the 2019/20 season by five cents to a range of $7.10 and $7.20. The co-op also narrowed its forecast for the current 2020/21 season to between $5.90 to $6.90 per kg.