The dairy world is a tiny place these days, so when the largest dairy exporter tells its producers to expect the highest milk prices in history in 2014, it probably means good things for U.S. producers, too.
The announcement came last week from dairy giant Fonterra, which processes and sells milk for about 90 percent of all dairies in New Zealand (like the one pictured here) and then exports almost all of it. Kiwi producers have long had some of the lowest production costs in the world, but their milk prices have never been what U.S. producers would consider high.
But that is on track to change in a big way, according to Fonterra's forecast.
Because of continued strength in international dairy markets, particularly for whole milk powder, Fonterra told its members it anticipates a 2014 season payout of $8.30 per kilogram of milk solids. For milk containing 3.5 percent butterfat and 3.2 percent protein, that works out to a huge $25.28 per hundredweight.
About 13.5 percent of U.S. milk production is currently exported, so Fonterra's rosy outlook is also good news for American dairies.
