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Milk price drop no reflection on demand

18 April 2012

Milk price drop no reflection on demand

World wide demand for milk products remains steady despite a 9.9 percent price index fall on the GlobalDairyTrade online market. Federated Farmers agrees with Fonterra this reflects the current abundance of milk being produced around the world.

“Almost ideal growing conditions around most of New Zealand this season has seen a record amount of milk production and a corresponding increase in products on the market platform,” Federated Farmers dairy chairperson Willy Leferink says.

“There is also more milk coming from the United States and Europe at the moment, meaning there is an abundance of milk products going through GlobalDairyTrade.

“This month alone there has been a 10 percent increase in volumes on the platform, so a price drop was not unexpected.

“We will have to watch what happens over the next few months, but with Fonterra already having revised down it’s payout by 45 cents to $6.30 per kg of milk solids, New Zealand dairy farmers should begin preparing for a potentially lower milk price forecast for the 2012-13 season.

“However, the price of whole milk powder indicated by GlobalDairyTrade represents just one day on the market.

“This is a volatile market with many factors influencing it. One thing which could have a big effect on global dairy production over coming months is the very strong beef prices at the moment, which could sway production towards the meat rather than the dairy side of the equation.

“New Zealand’s dairy industry is very resilient and used dealing with small downturns while looking to the long term picture, which is very rosy indeed,” Mr Leferink concluded.

ENDS

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