Strong demand set to help milk prices

LOWER expectations of worldwide milk output growth, and strong demand from importers like Russia and China, are expected to support dairy product prices for the first quarter of 2011.

Favourable market prospects were confirmed at last week’s Fonterra’s online auction, where prices rose 10.6% for anhydrous milk fat, 20.6% for butter milk powder, 10.9% for skim milk powder, and 3.8% for whole milk powder. This left prices just 3.5% below their April 2010 high.

In the EU, declining milk powder and butter prices until the second half of November, and US dollar strength, made EU exports more competitive, and domestic and international buyer interest have led to a rapid price recovery.