Milk prices keep upward momentum in November 

The price of whole milk powder has risen 13% on Fonterra's online auction, rising for the fourth month in a row.

The average price of whole milk powder in the November auction was $3,437 a tonne, up $410 a tonne on October and $574 on September. It is an 88% increase on the $US1,829 recorded in July's auction when trading declined for a third consecutive month.

Prices in the November auction ranged between $US3,270 and $US3,715 a tonne.

The co-operative's director for commercial and strategy, Nigel Kuzemko, says there is more positive sentiment in the market though the size of the lift in pricing this month reflected customer urgency in refilling their supply chains.

He says there is a "tight supply situation" for most products. Anhydrous milk fat, which traded for the first time on the online auction, achieved an average price of $US4,757 a tonne which Kuzemko said confirmed a shortage of supply.

He says recovery in consumer demand and economic conditions were by no means robust though a recent move by the Dairy Management Committee of the European Commission to reduce the level of intervention in dairy markets was a positive step which would encourage market stabilisation.

Craigs Investment Partners analyst Alexandra Dalzell says while the value at the farm gate will be eroded by the high Kiwi dollar, the rise is welcome news given that dairy accounts for about 25% of New Zealand's exports and 7% of gross domestic product.

Fonterra says more than $NZ1 billion of product has now been sold on the online auction which has been trading since July 2008.

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