$10 milk price still in sight despite global dairy markets softening
A $10 milk price remains on the cards for this season despite recent softening of global dairy prices.
The rise in global dairy prices could be partially attributed to demand from China, says Westpac market strategist Imre Speizer.
He says Chinese demand for dairy has remained firm despite its economic slowdown and the US-China trade war.
“At last night’s auction, North Asia (a reasonable proxy for China) again bought more than half of the total offering, with South East Asia/Oceania buying around a quarter.
“We continue to expect a further loss in momentum in China’s economy into year-end, which should constrain demand somewhat.
“However, over the longer term, its pro-active responses to recent adversities, via monetary policy stimulus, export diversification, and efficiency gains, should pay dividends.”
The Global Dairy Trade (GDT) price index rose 2%.
NZ's key export product, whole milk powder, rose 1.9%, which was close to the 1% gain predicted by WMP futures market, Speizer says.
All major products recorded gains, with skimmed milk powder up 3.4%, butter up 2.7%, and anhydrous milk fats up 0.6%.
“Prices have been fairly stable since the decline in June, the headline index currently sitting at the three-year average.”
Whole milk powder at $3133 is close to the three-year average of $3060. On the supply side, NZ milk production this spring should be decent given soil moisture levels and warmer temperatures (the latter arriving slightly later than usual).
“Against that, global production remains subdued. Our farm gate milk price forecast for 2019/20 remains at $6.50 (we reduced it a few weeks ago from $6.70). That leaves us toward the lower end of Fonterra’s own milk price forecast for this season of $6.25-7.25.”
Key results
AMF index up 0.6%, average price US$5,030/MT
Butter index up 2.7%, average price US$4,129/MT
BMP not offered
Ched index up 0.4%, average price US$3,846/MT
LAC index up 5.6%, average price US$770/MT
RenCas index down 0.1%, average price US$6,636/MT
SMP index up 3.4%, average price US$2,599/MT
SWP index not available, average price not available
WMP index up 1.9%, average price US$3,133/MT
Meat co-operative, Alliance has met with a group of farmer shareholders, who oppose the sale of a controlling stake in the co-op to Irish company Dawn Meats.
Rollovers of quad bikes or ATVs towing calf milk trailers have typically prompted a Safety Alert from Safer Farms, the industry-led organisation dedicated to fostering a safer farming culture across New Zealand.
The Government has announced it has invested $8 million in lower methane dairy genetics research.
A group of Kiwi farmers are urging Alliance farmer-shareholders to vote against a deal that would see the red meat co-operative sell approximately $270 million in shares to Ireland's Dawn Meats.
In a few hundred words it's impossible to adequately describe the outstanding contribution that James Brendan Bolger made to New Zealand since he first entered politics in 1972.
Dawn Meats is set to increase its proposed investment in Alliance Group by up to $25 million following stronger than forecast year-end results by Alliance.
OPINION: Voting is underway for Fonterra’s divestment proposal, with shareholders deciding whether or not sell its consumer brands business.
OPINION: Politicians and Wellington bureaucrats should take a leaf out of the book of Canterbury District Police Commander Superintendent Tony Hill.