Fon­terra auc­tion prices ris­ing

South Waikato News - - RURAL DELIVERY - By AN­DREA FOX

A third pos­i­tive price re­sult on the trot in Fon­terra’s fort­nightly on­line dairy auc­tion GDT has helped per­suade at least one bank’s econ­o­mists to lift their dairy pay­out forecast to $6 for the cur­rent sea­son.

West­pac said its up­grade from $5.70 for a 100 per cent share-backed Fon­terra farmer re­flected the con­tin­u­ing im­prove­ment in dairy com­mod­ity prices.

But BNZ econ­o­mist Doug Steel said he had seen noth­ing to in­di­cate the need to raise his bank’s forecast of $5.70.

Fon­terra’s forecast pay­out, made in Au­gust, for the 2012-2013 sea­son is for a pay­out of $5.65-$5.75.

The av­er­age price on Fon­terra’s overnight auc­tion lifted 0.7 per cent on a trade-weighted ba­sis, the third in­crease in a row and track­ing a lift in global com­mod­ity prices.

The av­er­age win­ning price was US$3348 (NZ$4105) per met­ric tonne. While still in­creas­ing, that is lower than the 1.1 per cent gain seen at the last auc­tion two weeks ago.

West­pac said prices were im­prov­ing as world dairy sup­ply con­tin­ued to be tight ow­ing to drought in much of the north­ern hemi­sphere.

GDT prices had risen 29.6 per cent on a tradeweighted ba­sis since the May trough in dairy prices, West­pac said. Over the same pe­riod, the Kiwi dol­lar had in­creased by around 5 per cent, only par­tially off­set­ting the world dairy price gains, the bank said.

The BNZ’s Mr Steel said the strong up­trend in dairy prices from the mid-May lows ap­peared to be ma­tur­ing. Fon­terra’s GDT is closely watched by the agri­cul­tural sec­tor and econ­o­mists in gen­eral as it is the chief fac­tor Fon­terra uses to de­ter­mine the pay­out farm­ers get per kilo­gram of milk solids.

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