Chinese demand returns, sending prices soaring
Chinese buyers are returning in force to replenish stocks and helping send global dairy prices higher.
Expect the volatility in the international dairy market to be around for some time.
That's the prediction from the Minister for Primary Industries, Nathan Guy who told Dairy News for the last six to eight months the GDT has been bouncing around and that looks likely to continue for some time.
The reason for the market volatility is not new and the extra 3% more milk coming out of Europe is adding to a world that has more milk than consumers want to buy.
"It's a case of waiting to see what Fonterra forecasts in the next month or two," he says.
"Open Country have come down 30 cents and this just confirmed in my mind that there is quite a lot of volatility still around. But I am always hopeful it is going to stabilise and improve. The medium to long term outlook for dairying is good and we know that the historical price over 15 years is $5.25."
Guy says Fonterra is helping out farmers with the 50c/kgMS interest free loan and banks are also being supportive. Farmers have culled cows and cut costs in an effort to cope.
"My view is that they will get through this season and I am always hopeful that the outlook for next season will be more optimistic," he says.
Guy says focus is now on what's happening with the Chinese economy which is going through structural turmoil. But it's important to remember that NZ is not the only country affected.
"I think about 124 countries call China their number one market so it's very competitive and every industry has to continue to add value to their products," he says.
"There are numerous examples of where the dairy industry is adding value especially companies with relatively low profiles."
Fonterra has introduced a new UHT bakery cream for its booming foodservice business in China.
Auckland manufacturer and distributor of colostrum-based supplements, New Image International, celebrated its 40th anniversary this month.
LIC farmers are set to benefit from a genetics collaboration with US company, Sexing Technologies (ST).
"It was awesome to see not only where our milk goes but to find out more about the range of ways it's used."
Departing Fonterra director Leonie Guiney is urging the next generation of co-operative farmers to step up and be there to lead in future.
Prime Minister Christopher Luxon says the relationship between New Zealand and the US will remain strong and enduring irrespective of changing administrations.
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