Whole milk powder climbed to a record as New Zealand’s most widespread drought in at least 30 years curbs supply in the world’s largest exporter, according to Fonterra Cooperative Group Ltd.
Powder for June delivery gained 12.8 percent, according to a trade-weighted index on the company’s GlobalDairyTrade website. The near-term contract for New Zealand product rose to $5,998 a metric ton. The previous record was $5,313 on March 19.
A drought declared across the entire North Island including Waikato province, the country’s biggest milk producer, may cost NZ$2 billion ($1.7 billion) as the dry conditions threaten economic growth, the government estimates. Growth in milk volumes will probably be unchanged this year after expanding 6 percent in the six months through January as the drought hurts production, Fonterra chief executive officer Theo Spierings said March 27.
Fonterra last month raised its forecast payout to farmers for the current season citing rising global demand at a time of restrained supply. Prices have surged 74 percent since Feb. 5.
Fonterra, which accounts for about 40 percent 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 Auckland-based 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 10.7 percent while prices across all five product contracts out to October rose 7 percent, Fonterra said.
In other auctions, prices for June delivery of milk fat, casein, cheddar, skim and butter-milk powder also increased. Butter fell. Lactose and milk protein concentrate weren’t offered.