The potential for a second consecutive season of a $10/kg milk price could inject an estimated $10 billion into the New Zealand economy over two years, according to DairyNZ. NZX derivatives sales manager James Atkinson highlighted that at this level, “a lot of dairy farmers—if not all—will be making a profit,” underscoring the profound economic benefit for the agribusiness sector. This financial injection is a welcome development for an industry that is the backbone of many rural communities.

Driving these elevated prices is a combination of strong Global Dairy Trade (GDT) prices, particularly for wholemilk and skim milk powder, and persistent global demand. According to NZX’s head of dairy, Cristina Alvarado, global production trends are playing directly into New Zealand’s favor. She noted that while New Zealand’s production is increasing, key dairy-producing regions like Europe and even the U.S. are not keeping pace, maintaining a strong interest in New Zealand’s supply.

Further compounding the market dynamics, the article notes that despite an expected increase in New Zealand’s milk volume as the season progresses, prices are managing to stay at historically high levels. This resilience is attributed to a “sticky and robust” global demand that is absorbing the additional volume. Meanwhile, domestic dairy production in China is reported to be in decline, while demand remains steady, creating another favorable factor for New Zealand dairy exports.