A three per cent dip in the average price of dairy commodities on Fonterra's GlobalDairyTrade (GDT) overnight auction is not surprising, with dairy commodities faring better than other global commodities amid jitters about the European economy, says an economist.
Doug Steel of the Bank of New Zealand said the fall was the biggest since July but in the scheme of things "not that big a move".
"It's the same old - fears around world growth, it's pretty choppy out there."
For example, China had come out yesterday offering support for the European debt crisis just as European ministers cancelled a meeting to further discuss bailing out the Greek economy.
The outlook for dairy commodities would depend on a resolution of the European debt crisis.
However, dairy prices had performed "remarkably" given the rocky global situation in the past six months by staying within a 5 per cent band, Steel said.
Notwithstanding the latest 3 per cent fall, he was holding the line that dairy prices had stabilised, and it was noteworthy that in GDT's longest term contract the price had risen 1.3 per cent overnight.
Overnight auction results:
Anydrous milk fat down 10.5 per cent to US$3546 per metric tonne:
Cheddar down 2.3 per cent to US$3559:
MPC70 down 0.8 per cent to US$5571:
Skim milk powder down 2.6 per cent to US$3259:
Whole milk powder down 3 per cent to US$3421.
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