Whole milk powder prices extended a late-month recovery amid concerns that New Zealand’s weather, having started off the season too wet, has now turned too dry, raising doubts over a milk output revival.
Whole milk powder futures for December nudged 0.4% higher to $2,830 a tonne on New Zealand’s NZX exchange – taking to 2.9% their recovery from a contract low reached last week, after a drop in values at much-watched GlobalDairyTrade auction.
The better-traded January futures contract, which closed unchanged at $2,910 a tonne, has more than regained losses since the November 21 auction.
The recoveries have been seen as fuelled by a cloud cast by dry weather over a recovery in dairy output, which began 2017-18, on a June-to-May basis, on a weak note, undermined by excessive rains, before recovering sharply in October, as pastures dried out.
‘Risk of drought is rising’
Although output in October, the peak month for New Zealand milk production, jumped 2.9% year on year, “now drier conditions are putting a question mark over the rest of the season”, Bank of New Zealand said.
“The risk of drought in New Zealand is rising,” said BNZ analyst Doug Steel, adding that “it has been drying out – rapidly.
“It is of particular concern that conditions are getting dry so early in the season, even before summer has started.”