Milk prices have fallen back again, defying expectations for a modest rally, although benchmark whole milk powder prices continue to outperform skimmed milk powder.
Prices at the GlobalDairyTrade platform, which is run by New Zealand milk giant Fonterra, fell by 1.4% since the last auction event two weeks ago.
The fall in prices came despite an uptick in New Zealand milk futures since the last event.
Before the auction, Tobin Gorey at Commonwealth Bank of Australia said that the increase in futures prices suggested that the auction would see “modestly higher prices”.
Whole milk beats skimmed
Prices for benchmark whole milk powder edged up 0.7% from the previous session, although this is still less of an increase than futures prices were talking too.
Whole milk powder prices have risen for the last three auction events, are now at their highest level for over three months.
But prices for skimmed milk powder were down 3.6%, to their lowest level since September of last year.
The premium of whole milk powder to skim milk powder is now at its highest level since October of 2015.
First Milk cuts
Last week the troubled UK dairy co-operative First Milk announced further cuts to the prices it pays producers, citing worsening market conditions.
But First Milk said its restructure over the last year has returned the business to profitability, despite the “worsening” dairy market.
Chief executive Mike Gallacher, who was hired a year ago to turn the company around, has shaken up the executive board, while slimming the company’s farmer board.
“We are on track and have made significant progress in reshaping the business and improving the operational performance, against a backdrop of a worsening dairy market,” Mr Gallacher said.
(Source – http://www.agrimoney.com/news/milk-prices-fall-against-expectations–9537.html)