Average prices for August milk were around 42 cents per litre at the top paying co-ops, but they could be lifted further by a strong global market for dairy, which is predicted to strengthen until Christmas at least by Fonterra, the New Zealand-based co-op which is the world’s largest milk exporter.
Strong demand from importers such as China, and sluggish supplies from major exporters, add up to a rising market, according to Fonterra.
Reduced milk output in Australia, the EU, and New Zealand over the past year, while US production growth stayed around 2%, are having their effects, according to Fonterra chief executive Theo Spierings.
Meanwhile, wet weather in Argentina and Uruguay reduced their dairy exports to the lowest level in decades.
Mr Spierings predicted dairy commodity values strengthening until Christmas, before farmers react by “turning on” supply.
He predicted New Zealand’s milk output will rise 3% in 2017-18. Output has been depressed by bad weather so far.