The global benchmark whole milk powder (WMP) price has fallen almost 40% since February to $3,088 per tonne. WMP prices on New Zealand’s GlobalDairyTrade (the country is the biggest milk exporting country) have slumped as China works through large inventories following a stockpiling drive earlier in the year. Although China will eventually return to the market, the effect of China’s recent stockpiling could be felt for years to come. Amid the surge in demand and high prices over the past year, farmers in New Zealand invested in in bigger herds and nutritional supplements. According to Goldman Sachs annual global dairy output will exceed demand by 2 billion litres through to 2018 – enough to fill 800 Olympic-size swimming pools. In recent weeks consumer brands from Starbucks to Hershey’s have hiked prices, blaming rising dairy prices among other commodities for the rise.
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