Fonterra milk powder prices decline to new low

Fonterra Cooperative Group, the world's largest exporter of dairy products, said whole milk powder prices fell at its lowest in two years during the company's internet auctions today (December 3).

Milk powder for February delivery fell by 15 percent to US$2,078 a tonne in this week's auction, the lowest since September 2006, according to results posted on its global DairyTrade website. The March contract also fell 15 percent to US$2,284.

Last month, Fonterra cut its forecast payment to farmers after a 24 percent slide in global prices for dairy products in the past 8 weeks and the prospects of a write-off of its stake in Chinese dairy company San Lu.

The revised forecast is NZ$6 per kilogramme of milk solids for the 2008/2009 season, down 60 cents from the previous estimate in September.

Dairy prices have joined a broad downturn in commodities on speculation that the slowing global economy needs less raw materials, fuel and food.

US$1 = NZ$1.899 (Dec 3)