Milking longer with maize silage
This season's dry conditions have made one thing clear: not having enough feed on hand can bring your season to an early close.
Demand for dairy will firm over the next two years as the global economy rebounds from Covid, says Westpac senior agri economist Nathan Penny.
He notes that the trend has already started in China and East Asia where demand has rebounded from its lows earlier in the year.
Westpac has announced a 2021-22 initial opening forecast of $7/kgMS. The forecast is equal to its forecast for 2020-21 and close to the $7.14/kgMS final price achieved in 2019-20.
“Our forecast is higher than the long-run average milk price, although the difference is smaller when the prices are adjusted for inflation,” says Penny.
A key change that Penny expects is that demand and prices for milk fat will begin to normalise.
Currently, milk fat prices are soft as consumers eat less cream and other milk fat products in settings such as restaurants.
“In particular, we expect that the rollout globally of Covid vaccines will gradually allow more people to return to restaurants and other venues that milk fat consumption relies on,” says Penny.
He expects moderate growth in the key exporting countries over the next two years.
“Over recent years, annual growth has averaged in the vicinity of 1%.
“This relatively modest growth is another reason why prices have held up well during the global Covid recession.
“Moreover, we see a low probability that global supply will deviate materially from these trends by enough to offset the impact on prices from rising demand.”
However, there are a few “forecast risks”, including the New Zealand dollar and the possibility that dairy buyers run down stocks after having built them up during Covid to protect against supply disruptions.
“We note that there is a risk that, if the New Zealand economy’s resilience continues to surprise and local interest rates rise, then the NZD/USD could rise beyond what we have assumed.
“In this event, the milk price would be lower.”
There is also uncertainty around global agricultural trade policy.
Penny says Joe Biden’s US presidency may take a more trade and China-friendly stance, thus allowing the US more access to China’s market and thus more competition for New Zealand dairy exports.
“Finally, we assume normal weather conditions going forward. In the case of a NZ drought, global dairy prices are likely rise.”
Recent rain has offered respite for some from the ongoing drought.
New Zealand's TBfree programme has made great progress in reducing the impact of the disease on livestock herds, but there’s still a long way to go, according to Beef+Lamb NZ.
With much of the North Island experiencing drought this summer and climate change projected to bring drier and hotter conditions, securing New Zealand’s freshwater resilience is vital, according to state-owned GNS Science.
OPINION: Otago farmer and NZ First MP Mark Patterson is humble about the role that he’s played in mandating government agencies to use wool wherever possible in new and refurbished buildings.
For Wonky Box co-founder Angus Simms, the decision to open the service to those in rural areas is a personal one.
The golden age of orcharding in West Auckland was recently celebrated at the launch of a book which tells the story of its rise, then retreat in the face of industry change and urban expansion.
OPINION: Should Greenpeace be stripped of their charitable status? Farmers say yes.
OPINION: After years of financial turmoil, Canterbury milk processor Synlait is now back in business.