Milk prices are rising on expectations that a tight market will be hit by further disruptions to fertilizer and feed supplies and inflationary pressures following Russia’s invasion of Ukraine.
Bad weather in New Zealand, the US and Australia, combined with skyrocketing gas prices and pandemic-related supply chain disruptions, had already put pressure on milk producers in the top five exporting countries before the war.
Combined dairy production in New Zealand — known as the “Saudi Arabia of milk” because it controls 35 percent of global exports — the EU, Australia, the US and Argentina fell 1.7 percent in January from a year earlier, according to commodities broker StoneX .
Milk production from the five producers fell year on year, with New Zealand and Australia reporting falls of more than 6 per cent.
After the start of the war on February 24, the prices of important products continued to rise. Anhydrous milk fat, a key dairy product, hit a record $7,111 per tonne on March 15, according to the Global Dairy Trade Index, which monitors New Zealand milk prices. Whole milk powder, the most actively traded product, hit an eight-year high this month.
New Zealand-based Fonterra, the world’s largest milk exporter, said last week it was paying farmers 30 percent more for milk than it was a year ago and predicted the price would continue to rise.
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