Dairy farmers are closely watching developments in the international grain market. Russia, one of the world's biggest wheat producers, has extended a ban on exports.
More than 11 million hectares of crops in western and central Russia have been devastated by drought and fires and Prime Minister Vladimir Putin has extended a ban on grain and flour exports at least until the end of next year.
Dairy Farmers chair, Lachlan McKenzie, says news of the initial ban in June sent international wheat prices to their highest for 23 months.
He says increased world grain prices have a tendency to push up the price of milk.
Fonterra believes a jump of 17% in the average selling price for all products at its monthly online auction last week, may have been due to the situation in Russia.
World wheat production is expected to be down more than 5% this year.
