Ukraine war latest: Zelensky raises prospect of Jerusalem talks after Knesset address

Workers prepare cows at a dairy farm that supplies milk to Fonterra in Hawera, New Zealand © Brendon O’Hagan/Bloomberg

Milk prices are soaring on the expectation that a tight market will be hit by further disruption to fertiliser and feed supplies and inflationary pressures following Russia’s invasion of Ukraine.

Bad weather in New Zealand, the US and Australia had already combined with rocketing gas prices and pandemic-related supply chain disruptions to put pressure on milk producers in the five biggest exporters before the war.

Combined milk production in New Zealand — known as the “Saudi Arabia of milk” because it controls 35 per cent of global exports — the EU, Australia, the US and Argentina fell 1.7 per cent in January compared with the previous year, according to commodity broker StoneX.

Milk output for the five producers fell year on year, with New Zealand and Australia posting declines of more than 6 per cent.

After the start of the war on February 24, prices of crucial products have risen further. Anhydrous milk fat, a core dairy product, hit a record $7,111 a tonne on March 15, according to the Global Dairy Trade index, which monitors New Zealand dairy prices. Whole milk powder, the most actively traded product, hit an eight-year high this month.

New Zealand company Fonterra, the world’s biggest dairy exporter, said last week it was paying farmers 30 per cent more for milk than it did a year ago and forecast the price would rise further.

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