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Global dairy market bottoming out, Dairy Australia

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According to Dairy Australia, the global dairy market is slowing signs of bottoming out as prices continue to slowly decline.

Global Dairy Trade prices last week took a 1.1 percent hit to represent $US3950 a tonne, losing around 22.4 percent since the start of February – a key indicator that prices are “bottoming out”, according to Dairy Australia analyst, John Droppert.

Droppert told The Weekly Times that the declining auction price was a result of improved farmgate prices in the southern hemisphere coupled with the northern hemispheres peak season. Additionally, he said that the decline reflected China’s recent absence from the market, and potential discounting from New-Zealand co-operatives in order to clear product before the end of the financial year.

“Commodities have come off the last few weeks, it confirms the correction of the international markets and as a consequence we will expect lower farmgate prices than this coming season,” Droppert told The Weekly Times. “Heading into next season we are in a much better place than 2012-13 ... we are back at the kind of commodity price levels of 2010-11 to 2011-12.

“We've fallen back into what is still pretty good territory.”

Bruce Donnison, ingredients and operations manager at Fonterra Australia attributes the decline to increasing supply through the global dairy market.

“In the near term, we foresee a continued softening in the market as increased production continues to come on to the market — especially from the EU and US,” he said.

“The impact of this correction in commodity prices on milk price will unfold over the next few months.”

Image:www.anh-usa.org

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