Wellington, Jan 7 - International dairy prices have fallen further in the past month, although the rate of decline has eased, raising hopes prices may steady soon, New Zealand's Fonterra Cooperative Group Ltd said on Wednesday.
Fonterra, the world's biggest dairy exporter, said the average selling price for whole milk powder (WMP) in an Internet auction that concluded on Wednesday was $2,017 a metric tonne, down 9.3 percent on a month ago, but an improvement on the December auction's 14 percent decline.
"Our own supply and demand analysis indicates that we are near the bottom of the price cycle," said Kelvin Wickham, Fonterra's managing director of global trade. Spot prices rose 1.3 percent from the December auction.
"Dairy prices have fallen as a result of the cyclical lag between supply and demand responses, though this has been accelerated by the demand downturn resulting from the global financial crisis and recession," he said.
Average prices for milk powder have fallen 54 percent since Fonterra started 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-month delivery dates.
On Dec 30 Fonterra said it would review its current forecast payout of NZ$6.00 a kilo of milk solids in the 2008/09 season to New Zealand suppliers, and announce any change on Jan. 27.
Chairman Henry van der Heyden said the continuing decline in prices meant there was downward pressure on the payout.
It paid a record NZ$7.90 a kilo in the season just ended, and in May made an initial forecast for the new season of NZ$7 a kg.
Fonterra is owned by around 11,000 farmers and controls about a third of the world's dairy exports. It generates more than 7 percent of New Zealand's gross domestic product and has annual sales of around NZ$17 billion ($9.8 billion). ($1=NZ$1.67)