Dairy leads index decline

Dairy continues to be a major force in driving down the ANZ commodity price index, which has recorded its ninth consecutive monthly decrease.

The index eased 1.6% in November, when dairy products made up five out of 10 prices which fell in the month.

Milk powder prices registered the largest decline. Skim and whole milk powder fell 7% and 6% respectively and both fell to five-year lows.

Cheese, butter and casein prices all eased 2%, drifting to two-year lows.

The dairy component has now fallen for nine successive months.

It is 37% below the level a year earlier and 45% below April 2013 peaks.

Mid Canterbury milk processor Synlait Milk held its annual meeting yesterday, at which chairman Graeme Milne outlined several challenges the company faced during the 2014 financial year.

While it was a good year for dairy farmers, as commodity prices were relatively high, their volatility throughout the year made it difficult to consistently achieve profit margins.

Changes to infant formula market regulations in China added further complexity, however the company was now in a strong position to take advantage of increased sales in that market, Mr Milne said.

Managing director Dr John Penno said the $19.6 million net profit after tax was in line with its prospective financial information (PFI) forecast of $19.7 million.

An increase of 43% in revenue to $600 million from $420 million in the previous year was above the PFI forecast of $524 million.

Increasing sales volumes with key customers and growing the company's infant formula and nutritional sales would be the key focus for the current year, Mr Milne said.

Add a Comment