The extension of a ban on Russian wheat exports has revived fears of world food shortages but is good news for New Zealand farmers.
The ban by Russia, the world's third-largest wheat exporter, was introduced in June, after drought cut supplies to its home market.
It was extended overnight, sending prices to a two-and-a-half year high on Friday, and came as the United Nations convened an emergency meeting to discuss wheat shortages.
BNZ economist Doug Steel says the ban should push up prices for dairy products, which are closely linked to grain prices.
Fonterra attributed a 17% jump in prices at Thursday's monthly milk powder auction to the Russian ban.
The auction was held before the extension was announced.