Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, said near-term whole milk powder prices rose to a six-month high at auction.

 

Milk powder for July delivery rose 1.6 percent from the June price set last month, according to the company’s GlobalDairyTrade Web site. It was the third straight gain. Prices for later deliveries fell.

 

The auction “confirms our expectation that dairy markets will be characterized by increased uncertainty in the future,” Nigel Kuzemko, portfolio optimization director at Fonterra’s global trade unit, said in an e-mailed statement. “We expect prices will continue to cycle around current levels.”

 

World prices of butter, milk and cheese have fallen from record highs 18 months ago as the slowing global economy capped demand for commodities and the U.S. and Europe increased dairy exports. Whole milk powder is selling for about half what it was when Fonterra’s monthly auctions began in July.

 

The Internet-based sales offer a one-month contract with delivery starting two months later, and two three- month contracts with delivery starting three and six months later. Prices for near and later deliveries diverged yesterday for the first time since January.

 

While those later deliveries coincide with peak production in New Zealand and Australia, the lower prices are more likely a reflection of weak demand, Kuzemko said in an interview.

 

“It is proving very difficult to pick consumer demand,” he said from Auckland.

 

In yesterday’s sale, powder for July delivery rose to an average $2,168 a metric ton, the highest since November.

 

Powder for delivery August through October fell 6.9 percent to $2,162 a ton, a three-month low. Powder for shipment November through January sold at $2,113 a ton, down 6.3 percent, also a three-month low. Average prices across all contracts fell 4.1 percent.

Source: Bloomberg (New Zealand)