Will Taylor

Fonterra auction to “blame” for high milk prices?

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Back in November (I need to post more often, lol) I posted about how retarded it was that the Fonterra auction was being blamed for low milk prices.

Reading in the news today that prices on the acution are up 24%,  I wonder if the auction will also be “blamed” for this change in prices?

I somehow doubt it, I think people will continue to attribute “blame” to the auction when prices don’t swing their way rather than look at the underlying reasons behind the change. Something like what Matt and I did after my last post on the auction (here).

3 replies
  1. Mark Hubbard
    Mark Hubbard says:

    I agree with this post, and the factors to look at per your other link. Though on the same issue thread on Hickey’s Interest blog someone has placed an interesting post, posing the question of whether or nor the quantity in last nights auction may have been ‘fudged’ 🙂 downward to give a better result.

    http://www.interest.co.nz/ratesblog/index.php/2009/09/02/whole-milk-powder-price-jumps-24-in-fonterra-internet-auction/#comment-35106

    I just hope the last two auctions are indicative of a longer term uptrend. It’s important Fonterra are able to meet their forecast this year, with the promise of improvement the season after.

  2. Miguel Sanchez
    Miguel Sanchez says:

    And a wonderful piece of nonsense it is too. If bidders thought that Fonterra was holding back – and Fonterra is hardly the only place they can buy from – then if they had a brain cell between them they would simply hold off until the next auction, knowing that with each passing month Fonterra would be more desperate to sell.

  3. Tussock
    Tussock says:

    Good comment. The Fonterra auction system took brickbats from all over when the WMP price hit bottom, but not a word from the same bods now prices have moved up.

    Does anyone have a link to the dairy tonnages in store, in the US and EU? I imagine this is published somewhere on the Net. Apparently these are significant, but far removed from the mountains of past years. Certainly don’t seem to be having much effect on price at present.

    Of course the kiwi at 67c+ remains a major worry for Fonterra.

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