Fonterra Trade Event Reflects Lower Demand and Increased Uncertainty

“Today’s result indicates lower demand for the longer-term contracts, and confirms our view that international dairy markets will remain weak until consumer demand improves,” said Kelvin Wickham, Managing Director of Fonterra GlobalTrade.

05/06/09 The June trading event for Fonterra’s internet-based sales platform, globalDairyTrade saw prices down across all contract periods reflecting lower demand and increased market uncertainty.

The trading manager, CRA International, advised Fonterra that the average price achieved across all products and contract periods for Whole Milk Powder (WMP) was US$1,886 per tonne FAS New Zealand Port. This was 12.0 per cent lower than for the previous trading event in May. Prices ranged from US$1,795 per tonne FAS to US$2,065 per tonne FAS.

“Today’s result indicates lower demand for the longer-term contracts, and confirms our view that international dairy markets will remain weak until consumer demand improves,” said Kelvin Wickham, Managing Director of Fonterra GlobalTrade.

“We need a sustained pick-up in customer and consumer demand to see any meaningful recovery in prices and that is not occurring as fast as we would like. And there’s increased uncertainty in the market because of the recent announcement of US subsidies and talk of European retaliation.”

The next globalDairyTrade trading event will be held on 1 July 2009. See www.globaldairytrade.info for more details.