Dairy commodity prices continue to increase

Dairy commodity prices increased for the third sale running at Fonterra’s latest auction, rising by an average of 4.9%, to US $4,828/t.

Whole milk powder was in strongest demand, rising by 7.7% on average, with butter milk powder up by 4.8% and cheddar up by 2.1%. Butter and rennet casein were the only commodities to drop in price, by 0.3% and 5%, respectively.

“At present, global price movements are primarily linked to milk supply in major producing areas,” said a report by DairyCo. “An optimistic outlook for the upcoming New Zealand season, combined with high stock levels in the US, had seen some wholesale prices fall after several months of steep rises.”

However, poor weather in the US had the potential to curb milk production, which was running 4.1% above the five-year average in April and May, it added. “California, the largest milk producing state, is experiencing record high temperatures, while Wisconsin, the second largest producing state, has received almost continuous rain.

“Any downturn in milk production has the potential to keep milk supplies tight and therefore support the continuation of firm wholesale prices.”


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