Global trade war 'bad news for NZ'
A global trade war beckons, which is bad news for a small open economy like New Zealand, warns Mark Smith ASB senior economist.
According to ASB Commodities Weekly report, last month milk solid production was up a whopping 7.7% on January 2018.
This was the largest increase since June 2018; season to date production is now running 5.6% ahead of 2017-18.
ASB senior rural economist Nathan Penny says this season is already on track to shatter records.
“Though we anticipate the hot weather might start to weigh on February production. As January drew to a close, the country entered a heatwave and record temperatures were recorded across several parts of New Zealand.
“Whilst drought is a perennial concern in summer, this year it's the heat itself that has drawn notice.”
Penny notes that elevated temperatures are impacting the behaviour of livestock, with some cows even “too hot to eat.”
Given that temperatures only peaked towards the end of the month, January’s production data will not have captured the full impact, he notes.
‘We will be closely watching February’s figures (due mid-March), to see if production starts to soften. We currently project 5% growth in milk solids production across the 2018/19 season, a shade more bullish than other forecasters.”
ASB’s 2018-19 milk price forecast stands at $6.25/kgMS; it is forecasting an opening price of $7/kgMS next season.
