Thursday, 09 April 2020 15:10

Lower milk price for upcoming dairy season 

Written by  Staff Reporters
Emma Higgins. Emma Higgins.

New Zealand dairy farmers can expect a lower farmgate milk price for the 2020/21 season, according to a new report from agricultural banking specialist Rabobank.

Based on the bank’s view of global supply and demand fundamentals, and aiming to factor in significant market uncertainty, report co-author senior dairy analyst Emma Higgins said Rabobank was forecasting a farmgate milk price of NZD $5.60/kgMS for the 2020/21 season.

“Given the rapidly-changing operating environment due to COVID-19, the forecast settings are incredibly complicated and there are a number of upside and downside risks that could impact the bank’s views on the global dairy markets over the course of our forecast timeframe,” she said.

“On the upside, these include stronger than anticipated Chinese demand, weakening of the NZ dollar further than our anticipated NZ 57 cents average over the forecast period,

In the report, New Zealand Dairy Seasonal Outlook: Battening down the Hatches, Rabobank says a number of factors linked to COVID-19 – including reduced Chinese imports, supply chain disruptions and consumption pull-back – combined with modestly rising dairy surpluses in export regions, will lead to an extended down cycle in global dairy markets.

Rabobank NZ chief executive Todd Charteris said while a more testing season awaits the country’s dairy farmers, the New Zealand dairy sector was well positioned to manage through the disruptions of COVID-19.

“Over the last three years, New Zealand dairy farmers have seen demand for their products grow strongly and they’ve enjoyed the strong dairy commodity pricing that has resulted.

Many in the industry have taken advantage of this favourable pricing by reducing debt levels and this will help them address the challenges arising due to COVID-19,” he said.

More like this

Dairy demand on the rise

There is increasing evidence that dairy demand is on the upswing, according to Rabobank senior agricultural analyst Emma Higgins.

Carrot and stick approach needed

With increasing and rising financial challenges, a well-balanced combination of carrot and stick will be needed to help dairy companies reduce greenhouse gas (GHG) emissions.

"Further rate hikes unlikely"

According to Rabobank, inflation expectations in the New Zealand economy are headed in the right direction, with interest rate relief on the cards for the second half of 2024.

Featured

Dairy sheep and goat turmoil

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.

Hurry up and slow down!

OPINION: We have good friends from way back who had lived in one of our major cities for many years.

Editorial: Passage to India

OPINION: Even before the National-led coalition came into power, India was very much at the fore of its trade agenda.

National

Govt urged to reduce ETS units

The Climate Change Commission wants the new Government to reduce NZ Emissions Trading Scheme (ETS) auction volumes as son as…

Dairy sheep, goat woes mount

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand…

Machinery & Products

All-terrain fert spreading mode

Effluent specialists the Samson Group have developed a new double unloading system to help optimise uphill and downhill organic fertiliser…

Can-Am showcases range

Based on industry data collected by the Motor Industry Association, Can-Am is the number one side-by-side manufacturer in New Zealand.

» Latest Print Issues Online

Milking It

Papal visit

OPINION: European farmers are going to extreme lengths to have their message heard.

Thai egg tarts

OPINION: The hustle and bustle of one of Bangkok's most popular fast food outlets may feel a world away from…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter