Tuesday, 26 July 2016 07:55

Bumbling prices need CPR shock

Written by 
Andrew Hoggard. Andrew Hoggard.

Feds dairy chairman Andrew Hoggard says the Global Dairy Trade (GDT) auction needs some CPR to shock it back into life.

"If you look more into the future, forward contracts were still pretty flat. Six months out it was still US$2200/t. We want to see prices get close to that US$3000/t mark so we can get things back to a nice level," he says.

"While everyone has brought their cost of production down, it is still very much hand to mouth at the moment."

He thinks many farmers are getting their costs down to the $3.50-$4/kgMS range.

"The challenge is if you've got $1/kgMS debt, then you are in a hard place," he says. "There are people with more than $1/kgMS debt so that makes the proposition for them extremely tough.

"It didn't fill me with confidence but it's not yet time to hit the gloom and doom panic button.

"It's bumbling along there and I think a lot of people would feel a lot more comfortable if we saw a couple of decent rises to give us more confidence, but at the moment it is not inspiring a great deal of confidence."

DCANZ information showed the North Island was down 5% and the South Island down 22% in June. But it is not an indication of a trend because of the small amount of production in that month anyway.

"Just a few people deciding winter milk wasn't worth it can alter that quite dramatically," he says.

 

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