Dairy farmers have had some relief overnight, as prices rose by nearly five percent in the latest Global Dairy Trade auction.
The overall average price for milk-derived commodities has risen 4.9 percent to $US3310 a tonne.
The all-important price of whole milk powder – which influences Fonterra’s payout to its farmer shareholders – is up 5.1 percent.
Skim milk powder prices rose 6.5 percent and butter prices grew by 8.8 percent.
The significant rise overall is the second after months of near-stagnant or falling prices.
The volume of products put up for auction fell 8.2 percent, compared with previous auction a fortnight ago.
AgriHQ analyst Amy Castleton said the ‘excellent’ price rise was the result of buyers starting to take note of weaker milk production from New Zealand.
“Buyers have not been paying much attention to NZ’s dry conditions to date, as the effects of poor pasture production had not yet flowed through to milk production statistics. But this appears to have turned around at this week’s GDT event.”
But she warned that the gains may not last.
“Global milk production is continuing to grow, notably that coming out of Europe and the US, so plenty more skim milk powder, butter and cheese will make its way onto the global market in coming months,” she said.