7 Feb 2018

Global dairy prices up again

1:59 pm on 7 February 2018

Global dairy prices have risen for the third time this year and are now at the highest point in four months.

no caption

Photo: 123rf.com

Overall prices were up 5.9 percent at the overnight auction to US$3553 a tonne.

The whole-milk powder price, which helps determine the payout to farmers, climbed 7.6 percent to US$3226 dollars a tonne, the highest it has been in eight months.

It was the third consecutive rise on the global dairy auction.

Massey University director of business innovation and strategy Professor Hamish Gow said the trend would not continue.

"I don't think it's going to hold and I think prices will come back to where they were beforehand.

"We've got a shortage on the market at the moment, this is a standard seasonal challenge that we have in February every year where milk production goes down in both Europe and North America."

Volumes sold at the auction were down by nearly five percent, which was unsurprising, Mr Gow said.

"New Zealand, we've had a dry summer, production is a little further down than it would usually be... All those combine to push prices upwards."

The market looked like stabilising, and higher prices were likely to drop off next month, he said.

"This is not something I'd expect to keep on going up at almost six percent in the last auction... It's probably going to come down and level off."

New Zealand milk prices were at the top end of the price range, he said.

"A lot of commentators out there have been calling a milk price lower. If you look at the milk price futures market it's down.

"The milk price at the end of the season will come down a bit. How far down?... Your guess is as good as mine."

Farmers should be realistic and budget on a lower milk price into the future, Mr Gow said.

The overall lift in the market puts it back into a healthier shape after several months of falling prices at the end of last year.

All products on offer at the auction increased in price, including butter, which jumped up 7.9 percent.