July 6, 2011

Fonterra's dairy product prices decline

Fonterra's latest online auction saw average prices of dairy products posting their largest decrease since March, adding to signs that commodity prices are declining from record highs due to a slowdown in global growth.

The GDT-TWI Price Index fell 6.7% to US$4,017/tonne, according to results posted on the globalDairyTrade auction website. That follows a 2.6% gain in the mid-June sale.

Skim milk powder led the decline for the second sale in a row, falling 7.2% to US$3,704/tone. Whole milk powder declined 6.8% to US$3,638/tonne. In both cases, the biggest decline was in the nearest to deliver contract.

The Thomson Reuters/Jefferies CRB Commodity Index of 19 commodities has declined about 9% from the two-and-a-half-year high it reached in late April.

Reserve Bank of Australia Governor Glenn Stevens said yesterday (Jul 5) that high commodity prices had helped slow the pace of economic growth in the past few months.

At the Fonterra auction, anhydrous milk fat fell by an average 1.4% to US$5,278/tonne, milk protein concentrate dropped 3.6% to US$6,172/tonne and rennet casein rose 1% to US$10,161/tone.

There were 104 winning bidders from 136 participants over nine rounds. The platform has 347 qualified bidders, up from 342 in the last auction.