Trust Chinese investors - banker
A Chinese business leader says Chinese investors are unfairly viewed as potential security risks in New Zealand.
Global dairy prices are settling down after a rollercoaster ride triggered by the COVID-19 pandemic.
Last week’s Global Dairy Trade (GDT) auction saw the price index rise 0.1%, a slightly better outcome than expected by markets. This followed a 1% rise in the previous auction. Whole milk powder price rose 2.1% with increased demand from China.
At last week’s auction, whole milk powder fetched US$2,761/MT – still 5% below the year’s peak in January and 9% below the average of the past three years ($3,040).
While analysts believe these are early days, the positive GDT result signals that the worst may be over for some key markets.
However, Northern Hemisphere production and a high NZ dollar could affect the milk payout for NZ farmers.
Westpac’s senior market strategist Imre Speizer says it’s hard to infer too much from just one auction.
He says the result is consistent with the rebound in economic activity seen in many countries since the contraction in April.
“Activity levels remain extremely weak, but possibly past the worst,” he says.
Westpac is forecasting a 2020-21 farmgate milk price of $6.30/kgMS.
Speizer notes that the futures market is broadly in agreement, pricing it at $6.20/kgMS currently, slightly more upbeat than the $6.13 two weeks ago and $5.93/kgMS at the end of April.
Last month Fonterra announced an opening forecast range of $5.40-$6.90/kgMS.
ASB is more optimistic and has an opening forecast of $6.50/kgMS. Senior economist Chris Tennent-Brown notes that this is towards the top end of Fonterra’s range.
While any lift in whole milk powder prices is encouraging, over recent weeks the stronger NZ dollar is an offsetting negative, he says.
It was noteworthy that North Asian share (a proxy for China demand) rebounded at last week’s auction to a level slightly above average for the past 12 months.
RaboResearch dairy analyst Tom Bailey notes that conditions in China generally continue to improve economically, which typically leads to increased demand for dairy.
However, Rabobank estimates that significant domestic stockpiles of milk powder remain in China due to spray drying in February, resulting from supply chain constraints in processing fresh dairy products at the time.
Bailey says these stocks will likely pose a demand risk for imported powders later in the year.
He also noted that demand for whole milk powder was up as markets reopen and supply chains are refilled.
However, while distributors might be refilling their pipelines, true consumer-level demand remains opaque around the globe.
New Zealand milk production is off to a strong start, with the first month of the 2025/26 dairy season recording a whopping 17.8% jump in milk production, compared to the previous season.
With adverse weather set to rain down on the Top of the South, the Bay of Plenty and parts of Northland, Agriculture Minister Todd McClay says farmers, foresters, and growers need to prepare for possible challenges.
Keep up with innovation and e-commerce in China or risk losing market share. That was the message delivered at the China Business Summit in Auckland this month.
Meat Industry Association (MIA) independent chair Nathan Guy says getting meat processors involved has been a shot in the arm for the sector's key marketing initiative into China, Taste Pure Nature.
Listed carpet manufacturer, Bremworth is undertaking a $6 million expansion at its Napier plant more than two years after the site was heavily damaged by Cyclone Gabrielle.
Federated Farmers is vowing to keep the big banks accountable for their actions and to continue pushing for meaningful change in the rural lending sector.
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