Dairy commodities fall due to fears of slowing demand

Dairy commodity prices dropped by the sharpest amount in eight months at Fonterra’s latest GlobalDairyTrade auction.
Average values across all commodities fell by 4.5%, to US $3,396/t (£2,141/t) – the lowest since August 2010, amid concern that demand may be slowing, particularly in China. Whole milk powder values dropped by 2.6%, to average $3,316 (£2,091) across all contract periods, with skimmed milk powder down by 2%, to $3125 (£1,970), and cheddar falling by 11.3%, to $3,114 (£1,964).
Closer to home, consumers have been changing their shopping habits to cope with the difficult economic times. According to the Institute of Grocery Distribution, consumers were shopping for groceries more often, with those shopping three or more times a week rising from 39% in December 2009, to 49% in December 2011.
“These trends are further supported by Kantar Worldpanel’s wider grocery market data, which has shown that purchase frequency has increased 4.8%, while volume per trip has declined 3.8%,” said a report by DairyCo. In the 12 weeks to 19 February, 23.7% of liquid milk was sold on promotion, compared with 38.3% last year.
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