Milk powder prices will remain at record highs for the foreseeable future, says animal feed supplier Volac International.

Global shortages of powder have pushed skim milk powder (SMP) prices to £1482/t and whey powder to £681/t on the Dutch official quotation, with market prices reported well above these levels.

David Neville, Volac International’s sales and marketing director, said the unprecedented run of high milk prices over the past 18 months had been driven by strong economic growth in the Far East.

Last year’s drought in Australia also had badly affected milk production, with levels forecast to be 10% down on the year.

In Europe, lower production, a strong EU internal market and the diversion of milk to maintain cheese and liquid milk supplies had reduced the availability of SMP for feed, as well as increasing price pressure on whey powder products,” Mr Neville said.

“As far as the whey powder market is concerned, prices have continued to strengthen on the back of these high SMP prices. Exports of all whey products in 2006 continued to grow on the year, including whey powder and lactose.”

“Looking at the current markets our view is that relatively high milk powder prices will be sustained well into 2007 simply because the main suppliers to world markets are experiencing shortages.”