Milk price up 23% – updated

The average price for whole milk powder  increased 21% and the price across whole milk, skim milk and Anhydrous Milk Fat rose by about 23% in this morning’s globalDairy trade auction.

In an email to shareholders, Fonterra chair Henry Van der Heyden attributed the price increase to  tightening supply because of  drier conditions and the season coming towards a close in New Zealand and Australia.

Fonterra has taken an option on some land in Central Canterbury as the site of a possible new processing operation.

Fonterra trade and operations manager Gary Romano said Fonterra was looking to secure enough land to expand the site, from an initial processing plant with the capacity to process 2.2 million litres of milk a day to a site capable of processing 10 million litres a day “at some point”.

“Canterbury is the fastest-growing dairying region in New Zealand. It is now producing about 15 per cent of the country’s milk for export and growing at a rate of more than 5 per cent annually,” he said.

The 50 new permanent jobs the development will create will be a significant boost for the economy of Darfiled, a very small rural town. 

The proposal is also a vote of confidence in the future of dairying.

UPDATE: The right hand end of the cut and paste copy of the graph above which shows the encouraging increase in price over time has been cut off.

This might be better:

You can see the original here.

UPDATE 2: interest.co.nz posts on the increase, notes it’s only 10% below the peak and could mean a better payout next season.