Global dairy markets are on fire, with Fonterra announcing a record farmgate price for milk and European spot butter prices surging by €500/t over the last month.
The New Zealand dairy giant confirmed this week that its farmgate milk price range for 2021-22 has now reached NZD $7.90/kg MS to $8.90/kg MS, with the midpoint moving to NZD $8.40/kg MS, the equivalent of 38c/l here. “At an $8.40 midpoint, this would equal the highest farmgate milk price paid by the co-op,” said Fonterra CEO Miles Hurrell.
“We have seen demand from China ease over the past couple of months, while other regions have stepped in to keep demand firm,” he explained.
The latest hike in global dairy markets has been driven by a slowdown in US production due to the increased cost of feed, and a stalling in EU output.
Higher maize and grain prices in the US have resulted in a significant cull in cow numbers, with the herd shrinking by more than 85,000 head between June and September.
Slower than expected EU supplies have already been reflected in stronger markets. Butter prices surged by €500/t on the Dutch spot market during October and have topped €4,900/t.
Skim milk powder is up €430/t since late August and has reached €2,930/t. Whole milk powder quotes have increased by €400/t in the same period and sold for €3,500/t last week. Although prices for Irish milk suppliers will inevitably harden further in line with global trends, the farm organisations pointed out that most of the benefits have already been eroded by higher feed and fertiliser costs.