April 18, 2012

 

 

Milk prices decline at the latest global Dairy Trade auction to their lowest since 2009, led by falls of more than 10% in prices of cheddar cheese and whole milk powder.

 

Average dairy prices fell 9.9% from the previous event, the steepest decline since global Dairy Trade a year ago upped the frequency of its auctions to twice monthly.

 

The drop took values, as measured by a global Dairy Trade index, to their lowest since September 2009, when the world was emerging from the depths of the global recession.

 

The decline reflected the continued strong output of milk in the major exporting countries, including New Zealand, where the auction's owner, dairy giant Fonterra, is based.

 

"The world is flush with milk. That is the issue right now." FCStone dairy and commodity analyst David Kurzawski told Agrimoney.com.

 

"In the US, we have milk coming out of our ears. There has been talk that some milk will be discarded.

 

"Oceania is not much different, and the EU no much different. The only place perhaps not going gangbusters is South America."

 

Meanwhile, demand is "stable, but does not seem to be growing at the same rate worldwide as last year".

 

The global Dairy Trade decline was led by cheddar cheese prices, which dropped by 12.1%, with rennet casein values falling 11.9%, and whole milk powder easing 11.0%.

 

Fonterra also raised the volumes of many products on offer at Tuesday's auction, with 20,000 tonnes of whole milk powder available.