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   Dairy Market News to February 3, 2012  Â
Dave Brown, R.A. Chisholm Ltd., Dairy & Meat Traders Since 1938
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NZ
February 1, 2012 GDT AUCTION - ALL PRICES DOWN – Source: Dairy Industry Newsletter February 1, 2012
Prices came down across all products at today's GDT auction, although the overall index fell by only 0.9%, reversing the 1.5% increase at the last auction. Powder prices fell only marginally, with the WMP price down 0.9% to $3,533/t and the SMP price down 0.5% to $3,296/t. AMF prices fell by 3.5% to $3,942/t and Cheddar by 1.1% to $3,640/t. MPC70 was $5,569/t, down 4.9%, and Casein $7,715t, down 4.3%. A total of 28,011t were sold for dispatch from March to October. For AMF and Cheddar the biggest declines were for April dispatch (6.4% and 2.9% respectively), but for WMP and SMP August to October dispatch fell by 6.5% and  3.2%, with other contracts changing only marginally. There was a small 0.9% fall to $3,008/t in Dairy America SMP for March, around $450/t below Fonterra contracts for April to October dispatch.
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AUSTRALIA
MILK PRODUCTION UP 3.5% IN NOVEMBER – Source: Dairy Industry Newsletter February 3, 2012
November milk production in Australia was up 3.5% compared with 2010 and production for the first 5mths of the 2011-12 season was up 3.0%. Year-to-date production was up 9.3% in Tasmania, +4.2% in Victoria and +3.9% in NSW. Year-to-date production was down 7.4% in WA, 7.1% in Queensland and 3.1% in SA.
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CANADA
AGROPUR APPOINT NEW CEO – Source: Dairy Industry Newsletter February 1, 2012
Agropur have announced the appointment of Robert Coallier as CEO, officially starting on February 27, taking over on current CEO Pierre Claprood's retirement. Coallier holds a bachelor's degree from McGill University as well as a MBA from Concordia University. With close to 30yrs of management expertise in various sectors, he has worked in consumer products and retail. For the past 2yrs, he acted as a guest member on Agropur's board. Founded in 1938, Agropur have annual sales of $3.6bn with 3,350 farmer shareholders and 5,700 employees. Agropur processes over 3bn liters of milk annually at 27 plants in Canada, the US and Argentina.
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CANADA
GAY LEA REPORT EXCELLENT YEAR – Source: Dairy Industry Newsletter February 2, 2012
Canada's Gay Lea Foods dairy co-op of Ontario has reported increased sales by 11% to C$491.3m and profits by 2% last year. They distributed $8.5m in patronage dividends to 1,200 dairy-farming milk suppliers and $1.45m to shareholders. They have no long-term debt and carry $40m cash in hand, their plants ran at full capacity and they are planning to spend $25m on plant expansions and upgrades this year.
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WORLD
RABOBANK’S LATEST DAIRY GLOBAL ANALYSIS – WHEY BECOMING MORE PROFITABLE THAN CHEESE
The global dairy market will offer strong growth prospects in the coming 5yrs but the uneven spread of market expansion and an era of elevated pricing will create as many challenges as opportunities for key players along the dairy supply chain. This is one of the key conclusions from the latest Rabobank Food & Agribusiness research report. Rabobank forecast that the global dairy market will expand at 2.4% pa over the next 5yrs, "to the envy of the food world". But that growth will be unevenly spread, generating some important market dynamics. Growth will be highly skewed to emerging markets, with China, India and South East Asia expected to account for more than 80% of market volume growth. Supplying these growth markets, many of which are already in supply deficit, will require considerable advancement on many fronts; including the development of safe domestic supply chains in emerging markets and the expansion and marketing of surplus production in export regions. Opportunities will also be uneven across product categories. In particular, economic, demographic and dietary trends are likely to see cheese sales under-perform, with sales of higher end whey product set to track a much faster growth path. "The divergence of cheese growth and whey demand represents a major structural shift in the market, and justifies a re-evaluation of ingredient production and sourcing strategies." Downstream, the processing sector is also confronting enormous challenges from high and volatile input costs, difficult economic conditions and retail power. In general the processing sector has managed to maintain or improve margins, through a combination of stripping costs, trading to higher value-added products and passing through cost increases to consumers. But experience has varied greatly by sector, with Fast Moving Consumer Goods (FMCG) players like Nestlé and Danone faring well, cheese makers also improving returns, while liquid milk players and major Chinese processors have seen returns decline. "Outsiders looking to enter what may appear to be an industry that has entered a golden age will need to carefully choose their investments, while those already inside need to continue to closely track industry direction and competitor moves to ensure they manage the risks adequately to position themselves to prosper," according to the Rabobank report.  Source: Dairy Industry Newsletter February 2, 2012
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