Dairy demand on the rise
There is increasing evidence that dairy demand is on the upswing, according to Rabobank senior agricultural analyst Emma Higgins.
Falling dairy prices in recent months are putting this season’s forecast milk payout under strain.
While Fonterra is maintaining its wide range milk price of $5.90 to $6.90/kgMS for this season, analysts aren’t ruling out trimming their forecast payouts if prices continue to head south.
A higher NZ dollar is also likely to negatively impact NZ dairy sector returns.
Westpac senior agri economist Nathan Penny says he remains cautiously optimistic on the outlook, but risks remain high.
Despite the price fall in last week’s Global Dairy Trade (GDT) event, current prices remain consistent with the bank’s $6.50/kgMS forecast.
“However, while we had allowed for prices to fall, we are running out of runway,” he says.
“In other words, if dairy prices continue to fall over coming auctions, noting that the largest auctions for the season are near, we will consider revising our milk price forecast lower.”
ASB senior economist Chris Tennent-Brown says its forecast of $6.75/kgMS “is under some pressure”.
“We will review our outlook after the next GDT auction and Fonterra announcement,” he says. Fonterra announces its full-year results next week.
RaboResearch’s Emma Higgins says she remains cautious regarding commodity prices as New Zealand heads into peak milk production.
Higgins notes that upwards currency movements are also a bit of a headache for exporters right now, with the NZ/US cross inching higher to sit at 67 cents.
“We do, however, expect recovery in the foodservice channel to continue to improve – this will be an important watch for ensuring market balance.
“We are pulling together the next Global Dairy Quarterly report over the next couple of weeks and will be re-assessing our view on the global dairy market fundamentals.”
Fonterra chairman John Monaghan wrote to shareholders last week asking them to remain cautious with on-farm financial decisions.
Monaghan says the global dairy market is finely balanced at the moment, with both demand and supply increasing but it has the potential to change.
“There is good demand in market at this stage of the season, however, the forecast economic slowdown is likely to increase global unemployment and reduce consumer demand,” he says.
The Climate Change Commission wants the new Government to reduce NZ Emissions Trading Scheme (ETS) auction volumes as son as possible.
Southland-based Mataura Valley Milk can now lay claim to be the first all-electric dairy factory in New Zealand.
Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.
Meat co-operative Alliance Group has bagged four gold medals at the Outstanding NZ Food Producer Awards, achieving top honours for every cut entered.
There is increasing evidence that dairy demand is on the upswing, according to Rabobank senior agricultural analyst Emma Higgins.
Fertiliser use in New Zealand over the 18 months is about 25% down from what it consistently was for the previous decade or more, says Ravensdown chief operating officer Mike Whitty.
OPINION: Your canine crusader reckons moves by the new government to try and breathe new life into the country's ailing…
OPINION: This old mutt suggests the new government is going to have to move fast to rein in a number…