Prices at the latest GlobalDairyTrade auction lifted 2.4%,
changing consumption patterns in China being cited for the
strength of global soft commodity prices.
Anhydrous milk fat lifted 2.7%, skim milk powder increased
3.9% and whole milk powder lifted 2.3% this week and there
was an average winning price of $US4980 ($NZ6050).
Fonterra last week revised its milk price forecast for
2013-14 to a record $8.30/kg of milk solids and, if auction
prices continued to rise, there was the possibility of
another upward revision, Westpac chief economist Dominick
The current Chinese slowdown reflected a rotation of growth
away from investment towards consumption, so households were
''moving up the food quality ladder'', Mr Stephens said.
The Chinese Government's inquiry into the retail price of
milk powder would have benefited wholesalers, with the
resulting reduction in retail prices boosting end demand for
The improvement in milk price combined with Westpac's
expectation of a 5% lift in production volumes would mean
$4.5 billion more revenue this year compared to last, the
equivalent of 2% of New Zealand's GDP, he said.
Lamb schedules were improving off a low base, beef prices
were still high and forestry returns had risen a little over
the past month.
The ANZ commodity price index posted another sizeable
increase, lifting 0.9% in September. That represented the
third highest level the index had ever reached, having risen
for a third consecutive month to be 3% away from the all time
high recorded in April.