Fonterra’s $3.2b capital return to farmers set to boost rural incomes and NZ economy
According to ASB, Fonterra's plan to sell it's Anchor and Mainlands brands could inject $4.5 billion in additional spending into the economy.
It says prices peaked in mid-September at a little above $8.40/kg. Since then, prices have dropped by 48 cents/kg or 5.7%.
ASB senior rural economist Nathan Penny says while posting recent declines, prices remain at record highs for this time of the year.
“Moreover, the average price over the last four weeks was 29% higher than the five-year average over the same period.”
Looking over the rest of the season, prices look set to remain at healthy levels. Lamb supply is constrained both over in the Tasman and locally.
“Indeed, Beef+Lamb NZ estimates that this season’s lamb crop will be nearly one million smaller than last season’s,” says Penny.
Meanwhile, global demand remains firm. Chinese and US demand is solid, with prices for the 2017/18 export season finishing 18% and 21% up on 2016/17, respectively.
“While we expect prices to moderate in line with the usual seasonal pattern, the 2018/19 season is shaping up as a healthy one overall for farmers,” Penny says.
