MILK POWDER prices, the lead-in dairy pricing, rose 3.2 per cent in the latest auction by Fronterra.
The New Zealand dairy exporter, the world’s largest, conducts fortnightly auctions for its milk powder, which is the leading global indicator of dairy prices.
That puts prices up 50 per cent this year.
The price rise us largely driven by shortages — or forecast shortages — as dairy farmers around the world react to the early 2016 price plunge by cutting back their herds.
New Zealand milk production has fallen two per cent this year. This is similar to falls in Australia, Europe and North America. And the world’s biggest dairy, which is India, is facing milk production falls because of drought. Their subsequent quitting of cows has another flow-on effect — pushing down beef prices in south-east Asia as Indian dairy beef floods the market.