Global dairy prices rise further as supplies tighten

International dairy markets jumped again at Fonterra’s latest auction, with the weighted average price rising by 14.2% to $4966/t.

Buoyed by tight supply and demand, values have risen by a massive 38% over the past two months. Just 13,912t went under the hammer at the latest sale – just over half the amount sold at the same time last year, as drought is curtailing late season production in New Zealand.

Back in the UK, commodity prices have tracked the bullish global trade, with DairyCo’s Average Market Price Equivalent (AMPE) rising by 1p/litre in March, to 32.4p/litre. That was its highest level since autumn 2011 and around 10p above the trough reached last summer. However, average farmgate prices continued to lag behind the market trend, easing marginally to 29.99p/litre in February.

“With spring hampered by cold and wintry weather, worries are mounting that the 2013-14 milk year will not get off to the best of starts,” said a report by DairyCo. Milk deliveries for the two weeks to 23 March were 8.2% less than last year. “Product supplies have been limited and this has seen upward price movements in virtually all commodities.”

Market report