Another drop in global dairy prices

Author
Sam Thompson and Patrice Dougan,
Publish Date
Wed, 3 Jun 2015, 6:29AM
Photo: stock.xchng
Photo: stock.xchng

Another drop in global dairy prices

Author
Sam Thompson and Patrice Dougan,
Publish Date
Wed, 3 Jun 2015, 6:29AM

UPDATED 10.30am: Another disappointing global dairy auction overnight.

Prices have fallen 4.3 percent, the sixth successive decline for the market, this time driven by a 10 percent fall in the price of butter.

Rabobank director of Dairy Research Hayley Moynihan says it reflects the weak market conditions still out there globally.

"Not a good start to the new season but still low volumes because it's not until we get out to aug set ovt that we get ints sig volumes for next season, and then prices become more meaningful."

Meanwhile, milk production is set to end the year three percent higher than last season, despite a summer drought.

ASB rural economist Nathan Perry says farmers weren't expecting to have so much milk.

"Until markets sort-of clear that milk that they didn't expect to have, we'll still see prices weak - that's going to take another two or three months."

The effect of falling dairy prices is taking its toll on farmers left struggling with more debt.

Penny says the drop is hitting farmers hard.

"Farmers are having to take on more debt they're going to be in a cash deficit this year."

Nathan Penny says farmers' cash flow will be tight for the rest of the year, and well into next year.