Dairy Prices Hit an All-Time High

Article by: Hari Yellina

At the Global Dairy Trade sale on Tuesday night, global dairy prices reached new highs. Overall prices rose 5.1%, sending the average price to a new high of $US5065 per tonne, according to the GDT price index. Cheese and butter both touched new highs. The outcome builds on the three prior auctions, each of which had increases of more than 4%. Cheddar prices rose 10.9 percent to $US6394 per tonne, while butter prices rose 5.9 percent to break the $US7000 per tonne threshold for the first time. According to ASB economist Nathaniel Keall, this year’s auction gains were broad-based and significant.

“However, due to local weather circumstances and overseas manufacturing constraints, the supply response has so far failed to materialise.” Mr Clark predicted that the Russia-Ukraine conflict would have little impact on global dairy prices, if anything, it would push them higher. “This is in stark contrast to Russia’s prohibition on food imports from nations that had imposed sanctions on it during the 2014 Crimean invasion,” he said. As a result, numerous big food exporters were forced to seek new markets for their products, lowering prices. “Russia has never lifted the import embargo, so it doesn’t have any leverage over food-exporting countries this time,” he said. However, the disagreement was anticipated to have an impact on input costs.

“Fears of supply disruptions have driven up feed and fertiliser prices, putting even more pressure on already tight production levels,” he said. “In the short run, this should support world dairy prices even more.” Markets continue to trade unpredictably as the world is on edge with the war between Russia and Ukraine. The grain market exploded higher on the day. March corn was up 42.25 cents to $7.3925/bu. March soybeans finished 61.25 cents higher to $17.0550/bu. March soybean meal gained $8.80 to $463.70/ton. March Chicago Wheat climbed 73.75 cents to $10.0175/bu. The livestock sector was mixed on the day. April live cattle lost 90 cents to $140.52/cwt. March feeder cattle fell $1.45 to $156.27/cwt. April lean hogs pushed $2.70 to $106.20/cwt. April crude oil increased $9.19 to $104.92/barrel.