Not enough milk drives prices up

It seems that this weeks globalDairyTrade was driven up so strongly this week (index up 16.9%) because buyers are short of product.  The Dairy Trader produced an interesting chart which shows the number of bidders and the number of unsuccessful bidders on the increase.

The result this week with Whole Milk Powder trading at above $3500/tonne for all delivery periods will have put some solidity behind the Fonterra forecast of a milk price of $6.60/kgMS.  But a note of caution - the prices appear to be toward the top end of the range above which demand may be affected.

But more importantly, so far the forecasts of a sustainable jump in dairy prices appear to be on the money.