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.

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