globalDairyTrade event reflects market caution
The July trading event for Fonterra’s internet-based sales platform globalDairyTrade, saw good customer interest but continued market caution around pricing.
The trading manager, CRA International, advised Fonterra that the average price achieved across all contracts and contract periods for Whole Milk Powder (WMP) was US$1,829 per tonne FAS New Zealand Port. This was $57 per tonne (or 3 per cent) lower than the June event. Prices ranged from US$1,790 per tonne FAS to US$1,925 per tonne FAS.
“We saw increased customer demand, but they remain wary about paying too much in an uncertain environment. Consequently they are taking a conservative approach with their purchasing as they try to second guess when the inevitable increase in demand, and consequently prices, will occur,” said Kelvin Wickham, Managing Director of Fonterra GlobalTrade.
“Today’s result reflects that the market is still in a rebalancing phase. On the one hand milk supply globally is declining sharply but on the other hand recessionary conditions mean consumers have reduced their purchases of dairy products. Right now our customers are attempting to predict exactly when decreasing supply or increasing consumer demand will result in an inevitable firming of prices.”
The next globalDairyTrade trading event will be held on August 3 2009. See www.globaldairytrade.info for more details.
