Milk powder prices up on Asian demand

Whole milk powder prices have increased by 15.4 per cent on sustained demand from China and concerns rising input and feed costs may curb supply, potentially boosting inflation, according to Fonterra. Powder jumped to $4,958 (EUR3,558) per metric ton from two weeks earlier, the highest level since auctions began in July 2008, according to Fonterra, the world’s largest dairy exporter.
Prices have soared 41 percent in the past three months, buoyed by demand from Asia and over concern that a dry spell in New Zealand may limit output. The surge may add to record global food costs, accelerating gains that have challenged central bankers from India to China to restrain prices while maintaining growth. Rising costs have contributed to riots in North Africa and the Middle East and to the toppling of leaders in Egypt and Tunisia.
However, rising dairy prices may spur supply, Fonterra says. Potential increases in production will come from the EU and the US, “where they can turn the tap on fairly quickly.” Dairy market demand in the Middle East and Asia is growing at about four per cent to five per cent a year and markets were likely to remain strong as rising incomes boosted demand, the company notes.