$8 final milk price likely
An $8/kgMS farm gate milk price is still on the cards with less than six weeks left to run this season.
OPINION: Volatility? What volatility? Farmers are asking as global dairy prices rose for the fifth consecutive Global Dairy Trade (GDT) auction last week.
Since November 20, 2018, dairy prices have risen; more importantly whole milk powder prices, used by Fonterra as a benchmark to set the milk price, rose a whopping 8.4% to exceed US$3000/tonne.
The GDT price index rallied 6.7% from the previous auction three weeks ago.
The average price was US$3265/t versus US$3057/t three weeks ago. Some 23,326t of product was sold, down from 27,909t three weeks ago.
What’s behind this golden mini-run?
Firm demand from Asian countries is likely to have helped to support prices.
And they are boosted by the EU starting to sell warehouse-loads of skim milk powder amassed in the last few years.
The EU had subsidised its farmers by paying them above market prices for their milk, but then storing it as skim milk powder until conditions improve.
The lift in the GDT price index and WMP prices has prompted banks to lift their forecast price predictions for the season.
They now predict $6/kgMS to $6.50/kgMS, close to the revised $6-$6.30 range Fonterra forecast in December.
Farmers will be pleased with the recent spate of price hikes, given that prices dropped last year over seven auctions before recording a lift.
Economists had long been expecting the price decline to reverse but the pace and extent of this improvement is a grand surprise. Why shouldn’t they rise more if the recent lift in demand persists?
However, some economists are cautious. There’s a risk that the pace of growth in Chinese demand for dairy products could slow as China’s growth cools generally; and if New Zealand milk production kept growing strongly it would keep a lid on prices.
NZ is set for a 2018-19 season production growth forecast of 5%, meaning the season is comfortably on track to set a record.
For farmers, there is now hardly any bad news on the horizon: production is booming and recent GDT results have overshadowed most downside risks to the forecast payout.
Everyone is confident the industry will see the milk price well exceed $6/kgMS this season. May the good times continue.
New Zealand dairy processors are welcoming the Government’s commitment to continuing to push for Canada to honour its trade commitments.
An educational programme, set up by Beef + Land New Zealand, to connect farmers virtually with primary and intermediate school students has reported the successful completion of its second year.
The Food and Agriculture Organisation of the United Nations (FAO) has welcomed a resolution adopted by the United Nations (UN) General Assembly to declare 2026 International Year of the Woman Farmer.
Waikato herd health veterinarian Katrina Roberts is the 2024 Fonterra Dairy Woman of the Year.
Trade Minister Todd McClay says New Zealand has no intention of backing down in a trade dispute with Canada over dairy products.
Horticulture NZ chief executive Nadine Tunley will step down in August.
OPINION: Canterbury milk processor Synlait is showing no sign of bouncing back from its financial doldrums.
OPINION: It seems every bugger in this country can get an award these days.