Strong production, tested demand send milk prices crashing
Strong global milk production and rebalancing of demand among key buyers has delivered one of the biggest drops in whole milk powder prices in recent years.
OPINION: There's growing confidence that dairy prices are firming up.
Last month, Fonterra lifted its forecast farmgate milk prcie mid-point to $8.50/kgMS and unveiled a new forecast range of $7.75 to $9.25/kgMS.
ANZ came out a few days later, raising its forecast milk price to $9/kgMS, which if achieved, will be the second-highest milk price on record.
The previous record was the 2021-22 season milk price of $9.30/kgMS.
The higher dairy prices can be attributed to factors such as little or no increase in milk production around the globe, including China, and firming demand. As usual, China remains the key.
Earlier this year, Chinese dairy purchases were at a 12-year low. There have been large increases in Chinese domestic dairy production, spurred on by the Chinese government. However, higher production costs and lower prices are slowing China's domestic milk production.
This has seen China come back to the Global Dairy Trade and buy a little bit more.
There's also talk that the Chinese government might encourage some dairy herd reduction to boost farm gate prices, which could lead to some additional imports.
For New Zealand farmers, things are looking up, however, higher interest rates remain a major challenge.
The average breakeven price assessed by DairyNZ for last season is $7.93/kgMS. The average breakeven price ofr the 2024-25 season is expected to creep back up to $8.07/kgMS with increased debt repayments and tax.
A $9 milk price will provide much-needed relief to farmers. For some it may prompt a little more spending on items such as repairs and maintenance, particulalrly work deferred due to low returns.
Still, the 2024-25 season has another nine months to run. Volatility will remain, but there is a good chance of prices firming.
Academic Dr Mike Joy and his employer, Victoria University of Wellington have apologised for his comments suggesting that dairy industry CEOs should be hanged for contributing towards nitrate poisoning of waterways.
Environment Southland's catchment improvement funding is once again available for innovative landowners in need of a boost to get their project going.
The team meeting at the Culverden Hotel was relaxed and open, despite being in the middle of calving when stress levels are at peak levels, especially in bitterly cold and wet conditions like today.
A comment by outspoken academic Dr Mike Joy suggesting that dairy industry leaders should be hanged for nitrate contamination of drinking/groundwater has enraged farmers.
OPINION: The phasing out of copper network from communications is understandable.
Driven by a lifelong passion for animals, Amy Toughey's journey from juggling three jobs with full-time study to working on cutting-edge dairy research trials shows what happens when hard work meets opportunity - and she's only just getting started.
OPINION: Westland Milk may have won the contract to supply butter to Costco NZ but Open Country Dairy is having…
OPINION: The Gene Technology Bill has divided the farming community with strong arguments on both the pros and cons of…