Butter remained in demand with the average price up 3.8 percent. Photo: 123RF
- Dairy prices surge to highest level in nearly three years.
- Average dairy auction price up 4.6 percent, butter and cheese rise
- NZ's top export set to give farmers record season payout
Prices for the country's top export earner show no signs of weakening.
The average price in the fortnightly global dairy auction increased 4.6 percent to US$4,516 driven by strong demand and restrained supplies.
Bidding in the second to last auction of the current season was described as fierce with strong demand out of South East Asia.
"Results on this occasion exceeded even the NZX dairy team's and SGX-NZX derivatives market's own prior bullish expectations," NZX dairy analyst Rosalind Crickett said.
She said reduced milk supply out of Europe was denting production, which was adding to the demand.
"With ongoing trade tensions between the US and Asian economies, and product supply constraints, there is a likelihood that prices will remain firm in the interim."
The price of wholemilk powder, which strongly influences the payouts for local farmers, increased 6.2 percent to US$4374 a tonne, the highest since April 2022.
Butter remained in demand as well with the average price up 3.8 percent to US$7,992 a tonne, the price for butter milk powder rising almost 7 percent, while cheddar cheese notched a double digit rise.
The strength of prices points to possible further increases in the final milk payout for local farmers, which dairy companies have already forecast to be around $10 a kilo of milk solids
Prices for other products were also strong, with butter prices rising nearly 4 percent and a double digit rise for cheddar cheese.
Average dairy prices are up 24 percent on a year ago, and wholemilk powder has gained 16 percent.
The strength of global prices has supported expectations of record dairy company payouts of at least $10 per kilo of milk solids for the soon to end 2024/25 season.
