Why New Zealand's milk supply problems will impact global prices

Tough conditions left New Zealand milk production for August down 4.9% year on year, at the lowest August volume for five years

Dairy cows graze at a farm that supplies to Fonterra Cooperative in Hamilton, New Zealand. In Europe and New Zealand, ever stricter environmental regulations are keeping a lid on dairy growth. Picture: Brendon O'Hagan/Bloomberg

Fears that a difficult early season could leave New Zealand’s annual milk supply as much as 3% behind last season are likely to underpin global milk prices.

The country's dairy farmers had a very tough time coping with New Zealand’s warmest and wettest winter (June to August) on record.