Less milk, weak $NZ to prop up prices
Dairy prices are falling on the back of weakening global demand for milk products but so is milk supply.
Westpac markets strategist Imre Speizer says the futures market for 2019-20 farmgate milk price remains stuck at $7.20/kg, where it has been since early February.
Speizer notes that this unsurprising given 80% of the season’s production volumes, as well as most sales, are known.
“That is in line with our own forecast for this season of $7.20,” he says.
Rabobank analyst Emma Higgins anticipates a milk price $7.35/kgMS, a decline of 35c.
Last week Fonterra reaffirmed its milk price range of $7 to $7.60/kgMS.
For the 2020/21 milk price, futures are predicting a price of $6.20/kgMS, from a pre-virus peak of $7.30 in January.
Both Westpac and Rabobank are reviewing their 2020-21 forecast prices and will report in the coming weeks.
