Australian drought could be good for Fonterra

The Australian drought could push up international dairy prices with Dairy Australia warning milk flows could be 6.9 per cent lower this season than last.

Fonterra was looking at markets Australian companies would not be able to supply, The Otago Daily Times reported today.

But the dairy giant warned that any lift in international prices would not occur until later in the season and the high New Zealand dollar would erode gains.

The co-op's manager of sustainable milk growth, Mark Leslie, said the 94 new dairy farms helped milk flows stay ahead of last year. Otherwise production would have been below last year.

Dairy Australia is predicting production of low cost products such as milk powder could be curbed as Australia deals with one of the most severe droughts in living memory.

- NZPA