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Dairy prices on Global Dairy Trade (GDT) have tumbled in recent months as the Chinese Government again locked down cities as part of its zero-Covid policy.
China's sway over what New Zealand dairy farmers get paid for their milk has been on display this year.
Dairy prices on Global Dairy Trade (GDT) have tumbled in recent months as the Chinese Government again locked down cities as part of its zero-Covid policy.
However, the latest GDT event broke a run of three consecutive price falls: the price index rose 2.4%, while key whole milk powder (WMP) prices posted a 3.1% rise.
Overall and WMP prices remain down 18% and 19% respectively on the same time a year ago.
Westpac senior agri economist Nathan Penny says the positive result follows an easing in Covid restrictions in China.
He notes that Chinese dairy demand had been progressively weakening over the year on the back of the soft Chinese economy.
"However, the loosening of Covid restrictions recently may signal a more pragmatic approach to Covid being adopted by Chinese officials."
When the Chinese economy is booming, NZ dairy farmers tend to benefit.
Penny expects the Chinese economy to grow by 6% over 2023 from a soft 3.5% over 2022.
He says this pickup in the Chinese economy and looser Covid restrictions should translate into improved Chinese dairy demand over the year ahead.
But ASB economist Nathaniel Keall believes dairy prices won't fully recover until the Chinese economy picks up. "We don't expect prices to make a more sustained recovery until that Chinese demand comes back - and that doesn't look imminent."
Keall notes that alongside ultratight global supply, aggressive purchases by China helped fuel the massive gains in dairy prices seen over early 2021.
This largely kept them high over the first part of this year, so the subsequent absence of strong Chinese demand has been sorely missed.
"As we've highlighted over numerous publications, the lack of Chinese demand is being driven by a softer domestic picture: a strict anti-Covid regime and slowing economic growth more broadly have meant the outlook for household consumption in China has weakened considerably."
ASB recently revised its forecast milk price for the season from a $10/kgMS to $9.40/kgMS.
Westpac is forecasting $8.75/kgMS for this season and $10 for the following season.
One of the country's leading experts on China has praised the NZ Government for its handling of the recent incident with China over that country's cyber attack on two of our parliamentary institutions in 2021.
Hopes of NZ sheepmeat prices picking up anytime soon in the country's key export market of China looks highly unlikely.
An $8/kgMS farm gate milk price is still on the cards with less than six weeks left to run this season.
Zespri has unveiled the award-winning KiwiBrothersTM mascots in China for the first time to market its large kiwifruit crop.
Authorities in China have clamped down on companies in that country which have been packaging and selling their own local fruit under the Zespri brand.
New Zealand dairy processors are welcoming the Government’s commitment to continuing to push for Canada to honour its trade commitments.
An educational programme, set up by Beef + Land New Zealand, to connect farmers virtually with primary and intermediate school students has reported the successful completion of its second year.
The Food and Agriculture Organisation of the United Nations (FAO) has welcomed a resolution adopted by the United Nations (UN) General Assembly to declare 2026 International Year of the Woman Farmer.
Waikato herd health veterinarian Katrina Roberts is the 2024 Fonterra Dairy Woman of the Year.
Trade Minister Todd McClay says New Zealand has no intention of backing down in a trade dispute with Canada over dairy products.
Horticulture NZ chief executive Nadine Tunley will step down in August.
OPINION: Canterbury milk processor Synlait is showing no sign of bouncing back from its financial doldrums.
OPINION: It seems every bugger in this country can get an award these days.
