Global dairy prices collapse to 13-year low

6 August 2015 04:15 am - 0     - {{hitsCtrl.values.hits}}

A A A Global dairy prices have plunged to a 13-year low, with whole milk powder suffering particularly sharp losses.

Prices on yesterday’s GlobalDairyTrade auction, which is run by New Zealand milk giant Fonterra, fell 10.7 percent from the last trading event two weeks ago.
Prices broke a previous 2009 low and are now at their lowest level since 2002. Whole milk powder, which is used in the all-important infant food market, was down 13.1 percent, with sharp falls in all traded products except lactose. Global dairy prices have been languishing since Chinese buying dried up last year, leaving a market with thick supply and low demand.

China is the world’s largest dairy importer and is believed to have a substantial backlog of milk powder to work through.

John Lancaster of FCStone told that prices in the recent auction might also have felt some pressure from the stock market crash in China.
“The magnitude of the fall doesn’t bode well for a recovery in prices,” he said.

The global dairy market has seen pressure from European production.

The EU recently abandoned a milk quota system, and farmers. A recent hot spell across Europe, particularly France, has threatened to cut the availability of forage.

But Lancaster said that “we have large amounts of excess milk across Europe” and noted that European milk production was already set to decline seasonally.

“It would have to be a long-term event to have a larger impact on supply,” he said.

Asked if there was any factor that could lift prices, Lancaster said “it’s difficult to see it getting a substantial increase in the short term until the excess supplies have been eaten though”.


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