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Milk prices are soaring as a tight market is expected to be hit by further disruptions in fertilizer and feed supplies and inflationary pressures following the invasion of Ukraine by Russia.
Bad weather in New Zealand, the United States and Australia had already combined with soaring gas prices and pandemic-related supply chain disruptions to put pressure on milk producers in the five largest exporters before the war.
Combined milk production in New Zealand – known as the “Saudi Arabia of milk” because it controls 35% of global exports – EU, Australia, US and Argentina fell by 1.7% in January from a year earlier, down according to commodity broker StoneX.
Milk production from all five producers fell year-on-year, with New Zealand and Australia recording declines of more than 6%.
After the start of the war on February 24, the prices of crucial commodities rose further. Anhydrous milkfat, a staple dairy product, hit a record high of $7,111 a tonne on March 15, according to the Global Dairy Trade Index, which monitors New Zealand dairy prices. Whole milk powder, the most actively traded commodity, hit an eight-year high this month.
New Zealand-based Fonterra, the world’s biggest dairy exporter, said last week it was paying farmers 30% more for milk than a year ago and predicted the price would rise further.
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