Economists have shrugged off a 1.4 per cent dip in average prices on Fonterra’s overnight global online auction, saying while prices are still historically high if the changing value of the US dollar is stripped out of the result, the outcome has stayed flat for the third sale running.
The average winning price on the auction, GlobalDairyTrade, was US$3500 a tonne.
BNZ economist Doug Steel said in Kiwi dollar terms, the average price was actually higher than the last auction.
"It’s a continuation of the recent theme of a further anticipated drift lower in global prices but in the bigger scheme of things, it [dairy commodity price] is holding up well against other commodities.
"In New Zealand dollar terms it is essentially flat and the third auction we have seen a stabilising in prices in New Zealand dollar terms."
Steel said the result was "quite encouraging" and no threat to Fonterra’s recently confirmed forecast payout for the 2011-2012 season. The forecast milk payout is $6.75/kg milk solids.
BNZ rural economist Con Williams said prices were still at a very high level – around US$200 a tonne higher than this time last year, and volumes traded were significant.
"My perception is that we are in a better space than last year."
Higher prices in the January and February auctions were the result of one-off extreme weather influences and were unlikely to be repeated, Williams said.
Any threat to Fonterra’s payout forecast would be seen in the next few months when the giant cooperative would sell large volumes of product.
There were 166 bidders on the overnight auction out of 387 qualified participants. Eleven bidding rounds saw 128 winning bidders, Fonterra said.
The average price of whole milk powder dipped 1.6 per cent, while skim milk powder was 0.3 per cent down on the last auction.
Cheddar average price fell 4.7 per cent and milk protein concentrate 4.9 per cent. Butter milk powder slipped 12 per cent while anhydrous milk fat was down 2 per cent.