Price gap between powder and cheese narrows

The disparity between prices of cheese and casein, and milk powder has eased during the third quarter of 2013-14, Fonterra says.

The dairy giant has had issues with capacity constraints, running out of milk powder-processing capacity following massive growth in dairy demand, while cheese and casein prices lagged well behind milk powder prices.

In March, it announced it was bringing forward planned capital investments to provide extra capacity.

In a global update this week, Fonterra said the relative increase in the price of reference commodity products shipped in the third quarter continued to be higher than the increase in non-reference products, but the effect was less pronounced than in the first and second quarters.

Reference commodity products were those used in calculating the farmgate milk price - whole milk, skim milk and butter milk powders, butter and anhydrous milk fat.

Prices for reference products were up 44% for the third quarter, compared with the third quarter in 2013, while non-reference products were up 22%.

Milk collection across New Zealand for the 11 months to April 30 reached 1524 million kg ms, 8% higher than in the previous corresponding period. Rain brought relief from the dry conditions that had affected volumes in the North Island.

North Island collection in April was 51% ahead of April last season, which was affected by widespread drought.

However, strong winds and heavy rain damaged properties in parts of the country.

The South Island continued to experience favourable conditions, with collection 16% ahead of the same period last year.

Milk collection across Australia for the 10 months to April 30 was 3% behind the same period last season, due to below-average spring conditions.

Recent rain across most regions and particularly favourable pasture growth conditions in Tasmania resulted in April milk collection that was 7% ahead of the corresponding period last year.

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