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ASB rural economist Nathan Penny.
ASB rural economist Nathan Penny says the bank sees an upside to last week’s milk price forecast from Fonterra.
“We’ll be watching NZ dairy production data closely over November and December for clues as to the direction of dairy prices over the remainder of 2019 and early 2020,” he said.
Overall auction prices have lifted by about 8% since the start of spring, with the price lift coinciding with softening NZ production growth.
Following these price moves, ASB already revised its milk price forecast higher by 50 cents to $7.50/kgMS two weeks ago.
“Looking ahead, we suspect that dairy auction prices may have further to climb,” he said.
“Recall that NZ October production was 1.5% down on October 2018 and, anecdotally, this production weakness has intensified over November.
“Meanwhile, EU and US production growth is also soft, with annual production only marginally above year-ago levels in both regions.”
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