International prices still in decline

Global dairy prices are still on the decline. At the latest Fonterra Global Dairy Trade sale, prices were 3,1% down on the previous sale at the beginning of November. Prices decreased by 49% since the beginning of 2014. The main reasons for the decrease are higher production in exporting countries, a slowdown in economic growth, in particular, in developing countries and the Russian boycott of dairy imports.

Lower product prices have already resulted in lower producer prices in major exporting countries. This will cause a slowdown in production in the near future and future price increases. According to MPO economist Dr Koos Coetzee, international market signals are mixed although the majority of commentators believe that prices may recover in 2015.