- Eric Meyer, president of Chicago-based risk management, advisory and brokerage firm HighGroundDairy
New Zealand producer prices declined in the second quarter, due to lower prices for milk and electricity generation, with input costs falling faster than outputs. The input PPI, which measures the change in prices producers pay for operating expenses, decreased 0.3% in the three months through June for an annual 3.3% fall, compared with the 0.5% drop expected by economists. Dairy product manufacturing inputs slid 4.2% in the reported period. Prices received by producers were 0.2% lower in the June quarter, Statistics New Zealand reported, as prices for dairy farming outputs slipped 5.5% over the quarter.
Global dairy prices have plunged from a peak in early 2014 due to a rapid build up of global supply and faltering demand from China. Weak dairy prices have slashed farmer incomes in New Zealand and may pose wider risks to the economy of the world's largest dairy exporting nation. However, the benchmark GlobalDairy Trade price index surged 14.8% at fortnightly auctions held by New Zealand dairy exporter Fonterra, rebounding from the lowest level since November 2002 reached at the previous sale. Wednesday's auction enjoyed the highest participation levels so far this year. Many buyers have stayed out of the market due to weakening growth of the world's second biggest economy, China, and global oversupply.
© Dukascopy Bank SA