Tuesday, 23 April 2019 09:49

Fourth bumper dairy season looming?

Written by 
Emma Higgins. Emma Higgins.

Rural banker Rabobank is forecasting a milk price of $7.15/kgMS for the new season.

In a report released last week, the bank notes that a fourth consecutive season of strong milk pricing is anticipated for New Zealand dairy farmers in 2019-20.

For the current 2018-19 season, Rabobank says modest upside is anticipated to the farmgate milk price, with this now expected to lift to $6.65/kgMS. 

In its seasonal outlook on New Zealand dairy, Fourth time lucky: Back in the black once more, Rabobank says stagnant global milk supply and robust global demand for Oceania-origin dairy products is expected to support strong milk prices for New Zealand farmers over the remainder of the current season and into the next. 

Report author, Rabobank dairy analyst Emma Higgins, said higher global dairy commodity prices had been sustained by below-average milk production growth from key exporting regions. 

“Climatic conditions from 2018 have plagued milk supplies in the EU, Australia and Argentina, while inadequate milk cheques for US producers have kept milk supply below historical averages,” she says. 

“And these supply side factors will either take time or significantly higher prices to turn around.” 

Higgins said the slow-down in global milk supply growth had led to a recent substantial rise in the pricing of Oceania-origin dairy product. 

“From December 2018 through to early April 2019, commodity dairy prices have jumped 24%, with butter and skim milk powder the two products to shift the needle most significantly,” she said. 

“We expect these strong global prices to hold in the short term, underpinning a rise in the current season forecast and a strong opening forecast for the 2019/20 season.” 

Higgins said while a new season forecast with a “seven in front” would be warmly welcomed by farmers, they would be wise to factor in some input cost inflation and budget accordingly. 

“As the milk price lifts so too does price inflation for on-farm purchases and expenditure for fixed costs such as electricity, feed and wages. Lower freight costs and weaker global benchmark prices for fertiliser may help to combat inflationary pressure, however, where possible, a focus on cost control is advised.”


More like this

Meat outlook good, but...

A rosy outlook on sheepmeat needs to be slightly tempered by market realities, one meat company suggests.

Forecasts steady as demand holds

Banks are mainly holding firm on their forecasts of $7/kgMS despite last week’s flat Global Dairy Trade result – a small decline of 0.4% in the overall price index.

No surprise in softer WMP price

Softer whole milk powder (WMP) prices are not surprising given China’s strong import activity recently and the steadily increasing WMP pricing, says Rabobank dairy analyst Emma Higgins.


» The RNG Weather Report

» Latest Print Issues Online

Milking It

Milk on tap

The days of cafes getting milk in plastic bottles may be numbered if two young Dunedin entrepreneurs have their way.

Behind the eight ball

Global animal health company DSM says it has a product that can help reduce emissions from cows by up to…

» Connect with Dairy News