International dairy prices are predicted to stay strong, despite slipping from the record peaks that they surged to late last year
Dairy co-operative Fonterra says prices are holding at higher than expected levels because of the supply squeeze caused by a drop in New Zealand milk production because of the drought.
That was one of the factors behind Fonterra lifting its forecast milk payout for the season by a further 40 cents to $7.30 a kilogram of milk solids.
Agribusiness banking specialist Rabobank shares Fonterra's view.
Rabobank international dairy specialist Tim Hunt says prices are likely to remain at relatively high levels for several years, despite some resistence in overseas markets to the unprecedented boom in commodity prices.
He says consumers in many parts of the world have been hit by increases in the price of dairy products ranging from 20% and 70%.
Mr Hunt says there have been similarly strong price increases are being delivered to farmers around the world.
He says that despite the talk of the United States going into recession, growth in developing countries remains strong and that is where there are most growth opportunities for dairy products.
Radio New Zealand
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