4 November 2009 - The price of milk powder surged for its fourth straight month in Fonterra Cooperative Group's online auction, climbing to a 13-month high as demand for dairy products returned to pre-crisis levels.
The average price of milk powder climbed almost 14% to US$3,437 per metric ton, according to globalDairyTrade website. That’s the highest level recorded since August last year, and an 88% gain from its low in July.
“We’re somewhere back in the vicinity of where we were two years ago when prices were on the way up,” said Kevin Wilson, ANZ National Bank rural economist. “The outcome’s very positive, but we need to temper our optimism as the EU has 200,000 tonnes of butter in stores and 300,000 tonnes of skim milk – while that’s not huge, at some stage it will get put out on the market.”
Dairy prices have underpinned the recovery in New Zealand’s commodities as buyers restock depleted inventories and demand for dairy resumes after slumping in the wake of the global financial crisis. ANZ Bank’s commodity price index rose for its seventh month in a row in October, and has advanced 24% from its low in February.
Gains in commodity prices have been somewhat offset by a surging New Zealand dollar, which has climbed more than 45% from its sub-50 U.S. cents low in March. The kiwi edged higher to 71.95 U.S. cents from 71.85 cents before the results were announced.
“The results are above the longer-run average in New Zealand terms,” Wilson said.
New Zealand’s exports of milk powder, butter and cheese slumped 18% to $434 million in September from a year earlier, while casein and caseinates tumbled 36% to $42 million. Dairy products account for about 24% of New Zealand’s annual $41.6 billion worth of exports.