Tight milk production lifts price
Shrinking New Zealand milk production has seen global dairy prices surge for the third straight rise this year, lifting them to their highest level for four months.
Dairy prices have risen at the Global Dairy Trade (GDT) auction, making all of the moves positive for the year so far.
The overall index was up 5.9 per cent to US$3553, following rises of 2.2 per cent and 4.9 per cent in January. It is now at its highest point since early October.
The price of whole milk powder (WMP) was up 7.6 per cent and cheddar 7.2 per cent. Butter continued its recent upward momentum, rising 7.9 per cent, following on from an 8.8 per cent increase last auction.
Federated Farmers dairy group chairman Chris Lewis said farmers would be breathing a sigh of relief at the good news, considering global share market pessimism.
While prices had lifted, the rise in the New Zealand dollar against the United States currency had nullified the gains.
‘‘The dollar has come up to its highest since May last year, so while we have made gains at auction, we’ve lost ground.’’
However, Westpac does not expect the upward trend to persist as the year progresses, due to the fact the US Federal Reserve will hike interest rates, while the RBNZ remains firmly on hold.
Lewis said rain lately had helped matters to an extent, but was not reflected in an improvement in production.
‘‘My cows are well fed but they are just not putting it into the milk vat.
‘‘It’s not the premium quality grass we’ve had in the past.’’
Fonterra reported December milk production was 4.6 per cent behind December.