Rise in world wholesale prices

A rise in world market prices that began in October and escalated during November and December, has seen whole milk powder and skimmed milk powder prices reach close to record levels.

Manufacturers are struggling to find supplies to meet agreed contracts and they are therefore prepared to pay high prices for marginal supplies.
There is uncertainty over the supply of dairy products, notably from Australia due to the drought and the domestic Australian market expected to be given priority. Output in Argentina and the US has been below expectation and EU exports of skimmed milk powder have almost stopped following the reduction in EU export subsidies to zero in June 2006.
World whole milk powder and cheddar prices are rising due to the increase in EU prices, uncertainty over supplies and lower export subsidies, 50% in January following cuts in November and December to present a surge in exports which would worsen the current EU shortage of milk protein and.
Butter prices remained stable at $1,950 (