increase font size
Chris Lewis.
Fonterra's farmgate milk price forecast upgrade was a welcome surprise although indicators were heading that way, says Federated Farmers dairy chair Chris Lewis.
“We are so nervous and cautious at the moment so I guess it was a bit of a surprise,” he told Dairy News.
Farmers had some expectations as they had noted the drop in the US dollar and compared to last year the GDT is on average $300/t higher.
Fonterra last week increased its 2019-2020 forecast farmgate milk price range from $6.25- $7.25/kgMS to $6.55- $7.55/kgMS.
The advance rate Fonterra pays its farmer owners will be set off the mid-point -- $7.05/kgMS -- of the revised range.
News of the upgrade would be greeted with a “huge sigh of relief” by cash-strapped farmers, says Lewis.
“It is good news for farmers who have been feeling a lot of pressure of late,” he said.
“Finance has been very tight and some of the regulations -- greenhouse gas and water -- are weighing heavily on farmers’ minds.
“There has been huge mental pressure for farmers of late, and we are overdue for some good news, so it’s a positive indicator as to where our season might end.”
He says he could feel a collective sigh of relief.
Lewis and some economists expect the current month -- when production typically hits its season peak -- could show a slight decline.
Rabobank dairy analyst Emma Higgins says they anticipate a farmgate milk price of $7.15/kgMS is possible for the 2019-20 season.
“We see global milk supply and demand remaining largely in balance over the remainder of the season,” she said.
“Coupled with a weaker kiwi dollar relative to last year, we see the possibility for further upside to our existing forecast. For now we are comfortable with $7.15/kgMS and we will be reviewing our forecast in early December 2019.
BNZ senior economist Doug Steel says the new forecast range with a mid-point of $7.05 makes sense. BNZ lifted its own forecast a few days prior to the announcement to $7.10/kgMS.
“Fonterra notes good international prices for the season to date and encouraging supply and demand dynamics for the period ahead,” Steel said.
“This suggests Fonterra has a degree of comfort that international prices will generally maintain their current decent levels.”
A watch on the GDT auctions will show how it plays out.
Fonterra chairman John Monaghan says the co-op had been achieving good prices for its milk so far this season.
“Demand for whole milk powder (WMP) has been firm, and for the full season we’re expecting it to be above last year. Global WMP production is down year to date and expected to continue to decrease for the remainder of 2019.
“We are also continuing to sell our skim milk powder at higher prices than EU and US dairy companies in Global Dairy Trade (GDT) events.”
Fonterra chief executive Miles Hurrell says there are positive signals for the milk price.
“It is still very early in the season and a lot can change. There are a number of factors we are keeping a close eye on, which is why we’ve retained a wide forecast milk price range,” he said.
Hurrell says the strong demand for the co-op’s milk and the prices being achieved, relative to other milk producing regions, demonstrate the rationale of Fonterra’s new strategy to prioritise New Zealand milk.
“One of our four priorities is to support regional New Zealand. If you take the $7.05 mid-point of today’s revision to our forecast farmgate milk price, it’s another $450 million into regional New Zealand.”
Never been busier
Federated Farmers is the busiest Lewis has ever seen it in trying to keep on top of responses to government policies, he says.
“Water, greenhouse gases, and you’ve got the biodiversity coming up, Resource Management Act, immigration announcements, the RoVE review on Primary ITO -- I could go on,” Lewis said.
“I have been involved with Feds for 13 years and we have never, ever, ever been so busy as we are now. We are stretched beyond our capacity with all the things coming out.
“It is more than overwhelming. We don’t want to let our farmers down and to do a good job requires a massive amount of resources. It’s really making us work hard.
“You have to piece it altogether -- all the science, the economics, all the different policy things. There are so many documents. There’s a 400 page one, then another 400 page one behind it.”
The Feds have had to split into different teams to deal with different sections just so they can make some sense of it.
He says there’s the election next year and he hopes some good policies come out.
OPINION: Recent media commentary from Southland Federated Farmers has raised concerns among our rural communities, particularly around Environment Southland’s approach to winter grazing inspections and nitrogen reporting. But let’s be clear, much of what’s been said simply doesn’t reflect reality.
OPINION: Environment Canterbury's (ECan) decision recently to declare a so-called “nitrate emergency” is laughable.
A shameless political stunt is how Federated Farmers is describing the Canterbury Regional Council decision to declare “a nitrate emergency” on the back of its latest annual groundwater quality survey.
Federated Farmers say Environment Canterbury's decision to declare a 'nitrate emergency' is a shameless political stunt that won't help anyone.
Farmers want the Government to scrap controversial freshwater rules that "put river spirits and ideology ahead of practical water use", says Federated Farmers board member Mark Hooper.
Acclaimed fruit grower Dean Astill never imagined he would have achieved so much in the years since being named the first Young Horticulturist of the Year, 20 years ago.
The Ashburton-based Carrfields Group continues to show commitment to future growth and in the agricultural sector with its latest investment, the recently acquired 'Spring Farm' adjacent to State Highway 1, Winslow, just south of Ashburton.
New Zealand First leader and Foreign Affairs Minister Winston Peters has blasted Fonterra farmers shareholders for approving the sale of iconic brands to a French company.
A major feature of the Ashburton A&P Show, to be held on October 31 and November 1, will be the annual trans-Tasman Sheep Dog Trial test match, with the best heading dogs from both sides of the Tasman going head-to-head in two teams of four.
Fewer bobby calves are heading to the works this season, as more dairy farmers recognise the value of rearing calves for beef.
The key to a dairy system that generates high profit with a low emissions intensity is using low footprint feed, says Fonterra program manager on-farm excellence, Louise Cook.
OPINION: Microplastics are turning up just about everywhere in the global food supply, including in fish, cups of tea, and…
OPINION: At a time when dairy prices are at record highs, no one was expecting the world's second largest dairy…
