ANZ Warns of Milk Price Risks as New Dairy Season Begins
The new dairy season is kicking off with plenty of risks to the forecast farmgate price, both upside and downside, says ANZ agricultural economist Matt Dilly.
New Zealand's second biggest dairy cooperative Westland Milk Products has released a budget for the 2016-17 dairy season of $4.55 - $4.95/kgMS.
Payout for the current season will be in the range of $3.80 - $3.90/kgMS.
Westland will also start its payout advance payments for the 2016/17 season at $3.80/kgMS payable September 20, 2016.
Chairman Matt O'Regan says, "This will provide much needed cash as early in the season as possible. Advance rates are budgeted to be phased down then stepped up, an approach similar to previous seasons."
O'Regan says the 2016/17 forecast while predicted to end with a better result than the 2015/16 season, still leaves farmers with cash flows well below their cost of production. The board and management will be looking for every opportunity to get as much cash to farmers as possible.
Chief Executive Rod Quin says the key influencers on payout are international market prices, foreign exchange rates, the contribution of Westland's value-add strategy, milk flows and expenses.
"The contribution to payout of our strategic move into value-add products – infant nutrition, EasiYo, retail butter and UHT milk and cream – is worth noting," Quin says. "Collectively, their value over and above the earnings we can expect from skim milk powder is budgeted at 48c per kgMS."
Quin says while Westland's pay out prediction is more optimistic than the current season, the market still faces a number of challenges.
"Prices remain under pressure as European and US dairy stock piles are now a feature of the market. Early contracts in our sales book are in line with budgeted prices, but market volatility with price movements, both up and down that can be sudden, make forecasting difficult.
"Based on what we see in the market today, with a forward view of global stock levels, customer demand and milk flows, we anticipate some minor increases for whole milk powder. However, we do expect pressure on skim milk and butter prices."
Esther Guy-Meakin has been announced as the new chief executive of the New Zealand Meat Board (NZMB).
According to a progress report on the Aotearoa Horticulture Action Plan (AHAP), New Zealand's horticulture sector is making real progress on the big issues facing growers.
A team effort that is paying dividends for the wider New Zealand economy.
A strong sense of community involvement is what propelled the Federated Farmers' North Canterbury president Bex Green to the honoured title of the Feds' Advocate of the Year 2026.
The country's second largest milk processor is warning against 'complacency' during a review of competition regulations in the dairy sector.
Oamaru-based livestock handling specialist Te Pari has bought Combi Clamp, the New Zealand manufacturer of Combi Clamp manual sheep handlers.
New research suggests the ag sector can unlock a $2.9 billion increase in profitability, not by farmers and growing more,…
OPINION: The culture of helping someone in need is alive and well in the ag sector.