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Milk Powder Auction Prices Rise to Second-Highest on Record

May 16, 2013

Whole milk powder auction prices soar as New Zealand’s most widespread drought in at least 30 years curbs supply.

Whole milk powder auction prices rose to the second-highest on record as New Zealand’s most widespread drought in at least 30 years curbs supply.

Powder for July delivery rose 2.8 percent, according to a trade-weighted index on the Fonterra Cooperative Group Ltd.’s GlobalDairyTrade website. The near-term contract for New Zealand product rose to $6,151 a metric ton. The record was $6,283 on April 16.

Prices have surged 93 percent this year as a drought declared across the entire North Island including Waikato province, the country’s biggest milk producer, curbed milk collection. The nation may receive near-normal rainfall through July, the National Institute of Water and Atmospheric Research said last week.

Fonterra on March 27 raised its forecast payout to farmers for the current season citing rising global demand at a time of restrained supply. Milk collection in April slumped 34 percent from a year earlier, the Auckland-based company said May 8.

Fonterra, which accounts for about a third of the global trade in dairy products, sells whole, skim and butter-milk powder, dried-milk fat, lactose, butter, cheese and casein at its GlobalDairyTrade auctions. The company offers monthly contracts with delivery starting from two months after the sale. Casein is a protein found in milk.

Whole-milk powder for August delivery increased 2.9 percent while prices across all five product contracts out to November dropped 1.7 percent, Fonterra said.

In other auctions, prices for July delivery of milk fat and casein also increased, while butter, skim and butter-milk powder declined. Cheddar, lactose and milk protein concentrate weren’t offered.

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