Global dairy prices slumped to their lowest in nearly six years on Tuesday as milk powder producers struggled to find buyers for their increased production with demand easing in Asia and other emerging regions.
The latest Global DairyTrade auction held by New Zealand dairy exporter Fonterra dipped 3.5 percent, taking the average selling price to $2,515 per tonne, its weakest since December.
The fourth consecutive fall seen at the fortnightly offer took the auction’s price index to 730, its lowest since August 2009.
The fall was led by a 7.5 percent slide in skim milk powder, following an expected ramp up in supply, particularly from European producers, after a lift in production quotas in the region. Whole milk powder prices slipped 1.8 percent.
“The price action for skim milk powder points to immense competitive pressure from both the U.S. and Europe (the two largest global suppliers) with prices now down 30 percent over the last four auctions,” ANZ analysts said in a note.
The latest fall in volatile dairy prices takes the Global DairyTrade index 3.5 percent lower since the start of the year, adding to a 50 percent tumble seen in 2014, when falling demand from China and import bans in Russia had knocked demand for dairy products.
Ongoing weakness in dairy prices prompted Fonterra, the world’s largest dairy exporter to cut its farmgate milk price to an eight-year low of NZ$4.50 per kilograms milk solids last week.
Source: Reuters
