increase font size
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.
New Zealand must continue to educate Chinese consumers about the unique qualities of its red meat products and how they differ from competitors, says Silver Fern Farms chief executive Dan Boulton.
Alliance Group and Grand Farm have signed a strategic co-operation agreement with a focus on delivering more premium New Zealand grass-fed beef to Chinese consumers.
The upheaval in the Middle East may have eased the fall in global dairy prices last week.
Chinese textile company Saibosi has partnered with Wools of New Zealand to put the 'farm to floor' story of New Zealand wool rugs on screen for its customers.
Global Dairy Trade (GDT) and Arla Foods have announced that Arla will begin offering European-sourced skim milk powder (SMP) on GDT Pulse from May 2025 as part of an extension to the GDT Pulse pilot.
Managing director of Woolover Ltd, David Brown, has put a lot of effort into verifying what seems intuitive, that keeping newborn stock's core temperature stable pays dividends by helping them realise their full genetic potential.
Within the next 10 years, New Zealand agriculture will need to manage its largest-ever intergenerational transfer of wealth, conservatively valued at $150 billion in farming assets.
Boutique Waikato cheese producer Meyer Cheese is investing in a new $3.5 million facility, designed to boost capacity and enhance the company's sustainability credentials.
OPINION: The Government's decision to rule out changes to Fringe Benefit Tax (FBT) that would cost every farmer thousands of dollars annually, is sensible.
Compensation assistance for farmers impacted by Mycoplama bovis is being wound up.
Selecting the reverse gear quicker than a lovestruck boyfriend who has met the in-laws for the first time, the Coalition Government has confirmed that the proposal to amend Fringe Benefit Tax (FBT) charged against farm utes has been canned.
