Farmgate prices rise as farmers rebuild confidence
Sheep and beef farmers are cautiously optimistic as farmgate prices continue to firm.
The butter boom is rolling on, says ASB senior rural economist Nathan Penny.
At last week’s GlobalDairyTrade event butter achieved its eighth record auction high this year – up 1.2% to US$6026/tonne.
“We expect it might even go higher again, so that’s an amazing story,” Penny told Dairy News.
A global shortage developing for the last two years has been fuelled partly by studies debunking the myth that animal fats are bad for human health.
“That was followed by an article in The New York Times saying saturated fats are not bad for you, they are not linked to heart diseases, this is false,” he says.
“Once that article was published... the foodies in the US started to get on board with butter. It fitted with the wholefoods story quite well.
“Butter picked up in North America first, then places like McDonalds agreed and put butter back on McMuffins, for example. It started there and spread globally.
“There is a shortage in Europe, China’s imports of butter are surging and on the supermarkets shelves here also the range of butters has increased compared to five years ago.
“So it is really a worldwide phenomenon but as it is quite recent, supply has not been able to keep pace. It will take a little while for supply to pick up hence we think it can go higher over the next six months or so.”
Looking over a three-month period, overall auction prices continue their holding pattern, Penny says. Whole milk powder (WMP) prices have lifted a modest 2.7% over this period, while overall prices have fallen a similarly modest 1%.
Overall dairy auction prices were largely unchanged last week (up 0.9%). WMP was also effectively flat (up 0.6%) in line with expectations. But key New Zealand dairying regions are very wet and production is stalling, he says.
“It is probably not too late for fine weather to turn things around and get a decent peak in the spring but if we get more wet weather in the next few weeks we will have a hole in production.
“If that eventuates we can see prices lifting over the next couple of months. That would mean we would revise our current milk price forecast of $6.75/kgMS to over $7/kgMS if we don’t get any better weather.”
June and July, with winter milk factored out, were not particularly strong, he says. Not only in Waikato but even in some places in Canterbury, farmers are saying they are running behind last season.
“We will get some official numbers down the track but those anecdotes are pretty widespread,” he says. “So I guess we’re looking to the heavens for the next few weeks to see where things head.”
Beef + Lamb New Zealand says it is seeing strong farmer interest in its newly launched nProve Beef genetics tool, with early feedback and usage insights confirming its value in helping farmers make better breeding decisions and drive genetic improvement in New Zealand's beef herd.
The Innovation Awards at June's National Fieldays showcased several new ideas, alongside previous entries that had reached commercial reality.
To assist the flower industry in reducing waste and drive up demand, Wonky Box has partnered with Burwood to create Wonky Flowers.
Three new directors are joining Horticulture New Zealand’s board from this month.
Beef + Lamb New Zealand (B+LNZ) says proposed changes to the Emissions Trading Scheme (ETS) will leave the door wide open for continued conversions of productive sheep and beef farms into carbon forestry.
Federated Farmers says a report to Parliament on the subject of a ban on carbon forestry does not go far enough to prevent continued farm to forestry conversions.
OPINION: Sydney has a $12 million milk disposal problem.
OPINION: Canterbury milk processor Synlait's recovery seems to have hit another snag.