Fonterra's record forecast organic milk price
Fonterra has announced a record forecast opening organic milk price of $12.30/kgMS for the new season.
At least one analyst is now predicting an all-time record farmgate milk price this season.
Falling milk production in New Zealand and other key dairy producer markets mean weak global supply, and this is expected to keep prices up.
Westpac senior agri economist Nathan Penny says it has upgraded its 2021-22 farmgate milk price forecast by 75 cents to $8.50/kgMS.
If achieved, this would be a record high, surpassing the previous record of $8.40/kgMS set back in 2013-14.
Fonterra is sticking with a wide ranging milk price forecast - between $7.25 and $8.75/kgMS and a midpoint of $8.
Penny says the key catalyst for the forecast revision is the significant downgrade to NZ production forecast for the season.
"We now expect New Zealand production to fall this season, and along with soft production in other key dairy producters, we expect weak global supply to underpin global dairy prices at or around current high levels for at least the rest of the year."
He expects NZ milk production to fall by 1% compared to last season, a change from its previous prediction of a 1% rise.
"New Zealand production has started the season on the back foot," says Penny.
"Winter and spring so far have been either wet or cold or both in many parts of the country. As a result, production for the first three months of the season is running at 1.8% behind the same stage of last season.
"We expect this production softness to continue in the short term."
Meanwhile, dairy production elsewhere is also soft. Weather has also impacted European production, with production for the first seven months of the year down 0.1% compared to the same time a year ago. In addition, Chinese (domestic) and US production continue to be constrained by very high feed costs and limited feed availability.
Last week's Global Dairy Trade auction recorded a flat result after several rise in prices.
Whole milk powder (WMP) prices, used as a benchmark to set the farmgate milk price, have lifted by around 5% since August.
ASB economist Nat Keall notes that dairy prices remain well above long-run averages.
He says not too much should be read into WMP prices dipping 0.4% last week to US$3,749/metric tonne.
"Given the current strength in prices, anything other than a sharpish decline at each auction continues to imply a solid farmgate price for the season," he says.
ASB is sticking to its forecast milk price of $8.20/kgMS.
Keall notes that the overall GDT price index remains up around 30-40% on the same point in the last three dairy seasons.
He agrees that milk supply could be tight in the coming months.
"Production data is increasingly pointing to tighter supply over the remained of the season," he says.
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.
OPINION: Years of floods and low food prices have driven a dairy farm in England's northeast to stop milking its…
OPINION: An animal activist organisation is calling for an investigation into the use of dairy cows in sexuallly explicit content…