New Zealand drought threat in global dairy markets

Dairy product prices increased 3.6% in Tuesday’s GlobalDairyTrade auction, led by gains in butter and butter milk powder.

Reduced supply could further ease pressure on global dairy product markets, as drought, low milk prices, and high cull cow prices are predicted to reduce 2015 milk output more than expected, in New Zealand and Australia.

IrrigationNZ has warned water restrictions for farmers are following a similar pattern to 2012-13, when drought conditions wiped more than $1bn dollars from the dairy-dominated New Zealand economy.