International dairy prices rose a further 10.9% in last night’s GlobalDairyTrade auction, a rebound that had been more or less anticipated by the NZX futures prices.
But bank economists said in a note they were hesitant about assuming further substantial price gains in coming auctions, as the milk supply situation remained unclear.
“The global dairy market has so far reacted strongly to Fonterra’s forecast of a 1.5% drop in milk collection for this season.
“But for higher prices to be sustained, dairy farmers will have to live up to that forecast over the coming months.
“We also need to see the other major dairy-exporting nations join in ‒ the somewhat dated figures we have at present (up to June) show an acceleration in Northern Hemisphere milk production, not a slowdown.”
