[3 August/ NZ Herald]

ASB Senior Rural Economist Nathan Penny said a slowdown in milk fat prices is likely temporary due to surging demand and tight inventories. Prices overall decreased 1.6 percent. Butter and anhydrous milk both decreased 4.9 percent while skim milk powder fell 3 percent. Whole milk powder prices rose 1.3 percent however the increase was less than the 4-6 percent increase futures price expectation. Butter and anhydrous milk fat prices increased 35 and 18 percent respectively this year. Mr Penny expected any further milk fat price increase would lift dairy prices more generally and break whole milk powder prices out of their holding pattern. Fonterra increased its 2017-18 milk price forecast to $6.75, after strengthening global dairy demand. Westland Milk Products forecast a net payout range, after retentions, of $6.40 to $6.80 for the 2017-18 season.