Wellington, March 4 - International dairy prices rose for the first time in nine months in March, although the market was expected to remain volatile, 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 $2,158 a metric tonne, up 16.6 percent on a month ago.
That compared with a 8.2 percent decline at February's auction and a 9.3 percent drop in January. It was the first time the average price has risen since Fonterra began Internet auctions in July 2008.
Kelvin Wickham, Fonterra's managing director of global trade, said he expected price volatility to continue given market uncertainty.
"We expect prices to move around in this transition period as supply and demand rebalances," Wickham said in a statement.
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 Jan. 28 Fonterra cut its forecast payout to dairy farmers by 15 percent to NZ$5.10 a kilo of milk solids in the 2008/09 season because of falling commodity prices.
The cut is estimated to cost the New Zealand economy about NZ$1 billion ($514 million).
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. ($1=NZ$2.02)