Tight global supply keeps milk prices high

Near record milk prices around the world are evidence of a tight global supply which is keeping dairy commodity markets very strong — a situation which is predicted to continue at least until New Zealand hits peak production in late October.

Trading continues at elevated levels, after prices for most products firmed or held their value in August.

Low inventory levels also underpin markets.

Improving climatic conditions in New Zealand have brought temperatures and pasture growth back in line with historic averages, according to the Fonterra co-op.

Their milk collections for June, July and August were 3.4% higher than the same period last year.

The company forecasts that milk volumes will grow by 5% for the 2013/14 season.