[Asia Economy Reporter Byunghee Park] Fonterra, the world's largest dairy exporter from New Zealand, has forecast that milk prices could reach an all-time high next year.
According to major foreign media on the 26th (local time), Fonterra predicted this, citing a significant increase in dairy demand in China, where the economy is recovering. On the same day, Fonterra announced the milk solids payment to be made to farmers starting June 1, setting it at an all-time high.
Fonterra stated, "Global demand for dairy products, especially New Zealand dairy products, continues to grow," and explained, "China is driving the increase in demand based on a strong economic recovery."
The increase in milk demand is expected to greatly benefit New Zealand's economy and government finances. Dairy products account for one-third of New Zealand's total exports. The dairy industry is even nicknamed the Saudi Arabia of dairy.
The Reserve Bank of New Zealand also diagnosed on the 26th that rising commodity export prices are stimulating the economy. Thanks to the Reserve Bank of New Zealand's optimistic outlook, there are market expectations that the timing of New Zealand's base interest rate hike will be brought forward.
ANZ Bank stated that New Zealand will start raising its base interest rate in August this year and that the timing of the hike could be even earlier.
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