Dairy prices rose for a third successive GlobalDairyTrade
auction – led this time by the likes of casein, whose relatively poor
performance prompted Fonterra, which runs the events, to warn of a profits drop.
The GlobalDairyTrade index nudged 0.2% higher to 1,466
points, its third highest ever, and the strongest since April's record high of
The increase came despite a fall of 1.5% in prices of whole
milk powder, which represent the bulk of volumes on sale, although Fonterra had
cautioned of a drop to 30,000 tonnes in offers of the product, from 34,500
tonnes at the previous auction.
However, prices of rennet casein soared 7.3% to their
highest ever at their two years on GlobalDairyTrade, and up 25% in the past two
Prices of butter were also notably strong, rising by 7.9% to
an average of $4,051 a tonne, the highest in seven months.
The strong performance by casein contrasts with a caution by
Fonterra that the relatively lowly price of the cheese ingredient, and protein food
supplement, compared with values of milk powders was holding back the
Fonterra last week, as it unveiled expectations of a halving
in profits and slashed its dividend guidance, said that its inability to lift
above 70% the proportion of its milk powder in its offering had opened up an
$800m value gap.
Demand for milk powder imports is being spurred by the
growing reliance in China on bottle feeding, as mothers go out to work, and
with confidence compromised over the safety of domestic dairy products.
Shares in Fonterra's shareholders fund, which touched an
all-time low of NZ$5.48 in Auckland after last week's profit warning, closed
on Wednesday at NZ$5.70, down 1.4% on the day.