Farmgate prices rise as farmers rebuild confidence
Sheep and beef farmers are cautiously optimistic as farmgate prices continue to firm.
The latest ASB quarterly report suggests a more positive outlook for the primary sector compared with previous quarters.
It notes that prices for key commodities have rebounded and forecasts have been nudged upwards.
ASB economist Nathaniel Keall says the more bullish growth outlook has a lot to do with changing expectations around what monetary policy will do. He adds that markets have become more bullish that rates won’t need to move as high, and the global economy might manage the fabled ‘soft landing’.
The report notes that dairy prices have managed to rebound by about 22% since their lowest point earlier in the season, but are still around 30% below the peaks enjoyed the previous year.
Keall says the main feature of recent auctions has been the enduring absence of Chinese purchases. Over the past three months, the world’s largest dairy importer has purchased less than 40% of the whole milk powder (WMP) on offer at each auction, versus a historical average of 55-60%. “We’ve twice revised our 2023/24 milk price forecast since our last report. The recent uptick has also pushed our forecast for the 2025 season higher, to a fairly robust $8.30 per kgMS,” he says.
But while there are some sweeteners for the dairy sector, the report describes meat prices as looking “pretty crook” and notes that overall protein prices have been hit the hardest. Keall says this is driven by cost of living pressures with consumers reducing their meat consumption. He says this is likely to continue for a while yet.
“But pessimism around the global economy is no longer acute as it once was, so we are hopeful that meat prices will rise modestly as the season draws to a close.”
Two key factors remain a problem for the NZ lamb industry: The whopping 13% rise in Australian lamb production, which has led to an oversupply and a generally weak lamb market; and China, where growth still remains sluggish as the country tries to sort out its domestic economic problems.
Alliance has announced a series of capital raise roadshow event, starting on 29 September in Tuatapere, Southland.
State farmer Pāmu (Landcorp) has announced a new equity partnership in an effort to support pathways to farm ownership for livestock farm operators.
Following a recent overweight incursion that saw a Mid-Canterbury contractor cop a $12,150 fine, the rural contracting industry is calling time on what they consider to be outdated and unworkable regulations regarding weight and dimensions that they say are impeding their businesses.
Trade Minister Todd McClay says his officials plan to meet their US counterparts every month from now on to better understand how the 15% tariff issue there will play out, and try and get some certainty there for our exporters about the future.
Brett Wotton, an Eastern Bay of Plenty kiwifruit grower and harvest contractor, has won the 2025 Kiwifruit Innovation Award for his work to support lifting fruit quality across the industry.
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