The quantity sold was down marginally at 39,273 tonnes, with the average price falling to US$2,513, down from US$2561 at the previous auction.
The nearby contracts fell the most at the auction. The Contract 1 whole milk powder price fell 6.9% from the last time it was offered at the November 4 auction. Contracts 2 and 3 fell 9.2% and 8.4% respectively, while Contracts 4 and 5 were down just 1.5% and 1.2% from the previous auction. Contract 6 prices were up 2.7%. This has had the effect of making the upward sloping forwards price curve even more pronounced.
Source: GlobalDairyTrade
The spread between WMP Contract 2 and Contract 6 prices is up to US$645, from US$356 at the previous auction. Fonterra offered Medium Heat Skim Milk Powder (SMP) for Contract 2 increased in price by 8.4%, while overall the average winning price for SMP had a 5% increase.
This has meant that Fonterra offered Medium Heat SMP prices have recouped the losses made at the previous auction to be similar to the November 4 auction for Contracts 2 and 3, and up by over 3% for Contracts 4 and 5. The overall average winning prices, however, were still 1.4% below the November 4 auction. Prices paid for SMP at the auction were above where NZX futures prices settled the previous day.
Fat products performed well at the auction. Anhydrous milkfat (AMF) increased 9.4% with a relatively even increase across all contract periods. The average winning price for AMF is now the highest since the June 17 auction. Winning prices for Fonterra offered Regular 210kg drums were up by over 9% for most contracts. The prices achieved were in the US$3700/t range, which is well above the US$3410-US$3510/t range seen on the NZX Dairy Futures market for the same contracts.
Butter prices were up 7.3% on average. The largest increase was for Contract 2, with a 9.7% rise, with the same price increase seen in Fonterra's Unsalted Butter contract for February shipping. Cheddar prices were up 5.5% on average, but there was a 0.1% drop in Contract 2 prices.
