NZ remains lowest-cost milk producer - report
The cost of producing milk in New Zealand continues to compare favourably with other exporting regions despite a lift in production costs over the past five years.
However, the bank is sticking to its forecast milk price of $9.25/kgMS for this season.
Penny says, at some stage, they anticipate that Covid restrictions in China will ease further and take dairy demand higher as a result.
"At that time, global dairy prices are likely to get a further boost."
However, he says last week's Global Dairy Trade auction result is consistent with its current forecast.
Fonterra has a wide ranging forecast milk for the season - $8.25/kgMS to $9.75/kgMS.
Penny notes that the mixed nature of the result suggests prices are in a holding pattern.
"At the last auction the market factored in better Covid news in terms of easing restrictions in China.
"But with no fresh news to digest on that front, the price moves reflected changes in product mix rather than any underlying factors."
