Milk prices are soaring in the expectation that the tight market will be hit by another disruption in the supply of fertilizers and feeds and inflationary pressures following Russia’s invasion of Ukraine.
The bad weather in New Zealand, the US and Australia has already teamed up with ingot gas prices and plague-related supply chain disruptions to put pressure on dairy producers at the five major pre-war exporters.
Combined milk production in New Zealand – known as “Saudi Arabia’s milk” because it controls 35% of world exports – EU, Australia, US and Argentina fell 1.7% in January compared to the previous year, according to commodity broker StoneX.
The milk production of the five producers fell year on year, with New Zealand and Australia declining by more than 6%.
After the start of the war on February 24, the prices of crucial products rose even more. Anhydrous milk fat, a core dairy product, peaked at $ 7,111 a ton on March 15, according to the Global Dairy Trade Index, which tracks New Zealand milk prices. Whole milk powder, the most actively traded product, reached a peak of eight years this month.
New Zealand’s Fonterra, the world’s largest exporter of dairy products, said last week that it was paying farmers 30% more for milk than a year ago, and predicted that the price would rise even more.
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