Wellington, Oct 2 - New Zealand's Fonterra Cooperative Group Ltd, the world's biggest dairy exporter, on Thursday reported a 10 percent fall in milk powder prices at its latest internet auction as financial market turmoil and an economic slowdown hit demand.
The dairy giant said the average selling price for whole milk powder (WMP) for December delivery was $2,865 a metric tonne, the third consecutive monthly fall in prices.
It said the global financial crisis and slowdown was curbing demand, while there was also an increase in supply.
"This combination of factors means there remains a short-term excess of supply in the market, although positive signs are emerging of increased demand for WMP (whole milk powder) in the New Year," said Guy Roper, Fonterra's commercial director global trade.
Average prices for milk powder have fallen around 34 percent since Fonterra started the online auctions in July.
The auctions offer a one-month contract with delivery starting two months after the auction, and two three-month contracts with three and six months delivery dates.
The average price for delivery in the three months to March fell 15.6 percent to $2,897 a tonne, and for the three months through June was down 9 percent to $3,035 a tonne.
Last week Fonterra cut its forecast payout for the 2008/09 season to New Zealand suppliers by 5.7 percent to NZ$6.60 a kilo of milksolids because of falling world prices.
It paid a record NZ$7.90 a kilo in the just ended season.
Fonterra, an unlisted co-operative owned by around 11,000 farmers, is the world's fifth biggest dairy company and the biggest dairy exporter. ($1=NZ$1.47)