milk prices

From Bloomberg:

Whole milk powder prices rose to the highest in more than two and a half years on demand from China and concerns that dry weather in New Zealand may curb supply.

Powder gained 8.4 percent from two weeks earlier, reaching the highest for the near-term contract since July 2008, according to auction results published today by Fonterra Cooperative Group Ltd., the world�s largest dairy exporter.

Prices have risen 20 percent this year amid increasing demand from Asian buyers and as dry weather in parts of New Zealand led to concerns about milk production. Higher prices �are the new normal,� Andrew Ferrier, chief executive officer at Auckland-based Fonterra, said in an interview on Feb. 14.

�There�s very strong demand out of China for whole milk powder and has been for some time,� said Doug Steel, markets economist at Bank of New Zealand Ltd. in Wellington. Rising incomes have boosted demand for dairy products in emerging markets and higher oil prices may fan demand from oil-producing nations as well, he said.

Whole milk powder prices will likely remain at least 50 percent above their historical averages in the longer term, Ferrier said this week. New Zealand in December declared medium- level droughts in Northland and in the Waikato province, the nation�s biggest milk-producing region.

�When you get quite a tight market and stocks are on the low side, it doesn�t take much of a change in outlook of supply to create volatility,� Steel said. �You�d be unwise to think the volatility isn�t going to be around for a while.�

Milk Contracts
Fonterra, which accounts for about 40 percent of the global trade in butter, milk powder and cheese, sells whole and skim milk powder and dried milk fat at its GlobalDairyTrade auctions. It offers one-month contracts with delivery starting two months after the sale, and two three-month contracts with delivery starting three and six months later.

Whole milk powder for delivery from May through July rose 9.3 percent, Fonterra said. Powder for shipment from August through October increased 5.1 percent. Prices gained 7.9 percent across all contracts.

On Dec. 10, Fonterra raised its forecast payment to farmers by 4.5 percent, citing higher international prices.

The end
Seems WCB may be fetching some pretty good prices at present