Whole milk auction prices have surged 58% since the start of the year.
Whole milk powder auction prices stayed near four-month highs, adding to signs that Fonterra Cooperative Group Ltd. can achieve its increased forecast payment to New Zealand farmers.
Powder for delivery across all contracts through March dropped 1.7 percent, according to a trade-weighted index posted on Fonterra’s GlobalDairyTrade website. The average winning price was $5,058 a metric ton, down from $5,124 at the last auction two weeks ago, which was a four-month high.
Fonterra, the world’s biggest dairy exporter, last month twice raised its forecast payment to New Zealand farmers for the year through May 2014, citing the outlook for global prices. Whole milk auction prices have surged 58 percent since the start of the year.
The company has reduced the volume of product it will sell at the auction, underpinning prices, it said Aug. 23. It achieved record sales at two auctions in August, held in the weeks after it disclosed a contamination scare affecting a whey protein shipped to China and used in the manufacture of baby formula.
New Zealand officials said Aug. 28 that their testing showed the contamination didn’t pose food safety risks. Fonterra directors are visiting China this week to rebuild trust among customers, Chairman John Wilson said last week.
Fonterra, which accounts for about a third of the global trade in dairy products, sells whole, skim and butter-milk powder, dried-milk fat, lactose, butter, cheese and casein at its GlobalDairyTrade auctions. Casein is a protein found in milk. Prices across all products fell 1.1 percent.