Milk Powder Prices Rise at Slower Pace on Signs Drought May Ease

Prices have surged 93% since Jan. 16 on drought-reduced milk output in New Zealand.

April 17 (Bloomberg) -- Whole milk powder climbed at a slower pace amid signs that New Zealand’s most widespread drought in at least 30 years may ease, according to Fonterra Cooperative Group Ltd.

Powder for June delivery gained 4.4 percent, according to a trade-weighted index on the company’s GlobalDairyTrade website. Prices rose 13 percent at the April 2 auction and 23 percent on March 19. The near-term contract for New Zealand product rose to a record $6,283 a metric ton. The previous record was $5,998 on April 2.

Prices have surged 93 percent since Jan. 16 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 June, the National Institute of Water and Atmospheric Research said earlier this month.

Fonterra last month raised its forecast payout to farmers for the current season citing rising global demand at a time of restrained supply. Milk collection in March fell 16 percent from a year earlier, the Auckland-based company said April 11.

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 July delivery rose 1.3 percent while prices across all five product contracts out to October rose 2.4 percent, Fonterra said.

In other auctions, prices for June delivery of milk fat, casein, butter, cheddar, skim and butter-milk powder also increased. Lactose and milk protein concentrate weren’t offered.