April 8, 2010
 

Dairy farmers in New Zealand have received some late-season good news as prices of whole milk powder shot up 21% in Fonterra's online milk auction recently.

The milking season in the country is coming to an end but the price hike will give a real boost to dairy farmers in the coming season.

Fonterra says global demand has increased because of lower production in New Zealand and cold weather in Europe, which prompted buyers to secure supply.

New Zealand has seen a fall in production in the north region while Australia's dairy output has decreased by around 6%, according to Fonterra Dairy trade manager Paul Graves.

Milk powder prices have now doubled from the lows reached last year and are within 10% of the high reached in 2008.

As the milking season is almost over, the payout to dairy farmers will not be significantly affected, but Fonterra believes the increase will eventually be passed on.

The price surge relies on sustained economic recovery and growth in GDP, and milk prices are likely to be sustainable in the region given the present economy condition, Graves added.

Although milk powder is only a small part of Fonterra's sales, higher dairy prices present an optimistic outlook for the country's milking season next year.