BNZ lifts milk price forecast to $10.25/kgMS for 2025-26
A stronger than expected outlook for dairy has prompted one bank to lift its 2025-26 season forecast milk price by 75c to $10.25/kgMS.
The farmgate milk price could possibly rise beyond $7/kgMS in the 2019-20 season.
That's the message from BNZ senior economist Doug Steel following the seventh consecutive GDT Event price index gain last week.
But he remains wary of demand, given slowing global and Chinese growth indicators.
But ASB’s Nathan Penny is sticking with his bullish $7/kgMS forecast for next season after the price index climbed 3.3% last week.
Steel told Dairy News last week’s overall gain was underpinned by a chunky 6% lift in whole milk powder (WMP). The price index has made a cumulative 23.8% gain since November last year.
“Tight global supply (including slowing late season NZ milk production) is providing support to prices,” Steel says.
“EU milk production has been flat and stockpiles unwound, while Australian milk production is well down on a year ago. Meanwhile, demand looks strong with unsatisfied bidders at this auction well above average at 67.”
If prices were to hold their recent gains the 2018-19 milk price would come in close to the mid-point of Fonterra’s newly minted forecast range of $6.30 to $6.60/kgMS, Steel says. This adds to the upside possibility of BNZ’s $6.25/kgMS forecast.
It is the first auction where WMP prices have pushed materially above the Reserve Bank’s medium view of US$3000/tonne, with last week’s prices reaching US$3186/t, he says.
Currently BNZ’s forecast for next season stands at $6.10/kgMS but there is a clear upside possibility. Current market conditions are consistent with a 2019-20 milk price of $6.70/kgMS but it could push above $7/kgMS. But aside from slowing demand indicators there is also a chance that global milk production might improve as grain prices weaken, he says.
Rabobank dairy analyst Emma Higgins says the total SMP volumes on offer for last week’s GDT Event (6255t) was significantly higher than the prior event in February 2019 – over 40% more.
“This highlights the extra milk New Zealand farmers have been pumping out this season and is highlighted further when considering the SMP volumes for this event were up 112% on the first March event last year.”
These factors contributed to the decline in SMP pricing of 4.3% last week.
“On the other hand, the average WMP leapt 6% to land at US$3186/t. The volumes on offer were less than the prior auction (-8%) but still significantly higher than last year (+35%). WMP demand is robust at present and this is a very strong result seeing as milk continues to flow (albeit heat impacted in recent weeks) and product volumes are plentiful.
“As we move closer to the northern hemisphere spring flush, buyers will be turning their eyes towards how the season is shaping up there,” she says.
“More milk will likely be available from Ireland given that last year weather challenges hampered production.
“But France and Germany are still lagging behind their prior year milk collections. Weekly collections through to February 10 suggested Germany was 0.6% lower and France 3% below the prior year.”
An independent report, prepared for Alliance farmer shareholders is backing the proposed $250 million joint venture investment by Irish company Dawn Meats Group.
Whangarei field service technician, Bryce Dickson has cemented his place in John Deere’s history, becoming the first ever person to win an award for the third time at the annual Australian and New Zealand Technician of the Year Awards, announced at a gala dinner in Brisbane last night.
NZPork has appointed Auckland-based Paul Bucknell as its new chair.
The Government claims to have delivered on its election promise to protect productive farmland from emissions trading scheme (ETS) but red meat farmers aren’t happy.
Foot and Mouth Disease outbreaks could have a detrimental impact on any country's rural sector, as seen in the United Kingdom's 2000 outbreak that saw the compulsory slaughter of over six million animals.
The Ministry for the Environment is joining as a national award sponsor in the Ballance Farm Environment Awards (BFEA from next year).
OPINION: Should cows in NZ be microchipped?
OPINION: Legislation being drafted to bring back the controversial trade of live animal exports by sea is getting stuck in the…