Wednesday, 04 September 2024 10:55

Editorial: Stars lining up for dairying

Written by  Staff Reporters
Earlier this year, Chinese dairy purchases were at a 12-year low. Earlier this year, Chinese dairy purchases were at a 12-year low.

OPINION: There's growing confidence that dairy prices are firming up.

Last month, Fonterra lifted its forecast farmgate milk prcie mid-point to $8.50/kgMS and unveiled a new forecast range of $7.75 to $9.25/kgMS.

ANZ came out a few days later, raising its forecast milk price to $9/kgMS, which if achieved, will be the second-highest milk price on record.

The previous record was the 2021-22 season milk price of $9.30/kgMS.

The higher dairy prices can be attributed to factors such as little or no increase in milk production around the globe, including China, and firming demand. As usual, China remains the key.

Earlier this year, Chinese dairy purchases were at a 12-year low. There have been large increases in Chinese domestic dairy production, spurred on by the Chinese government. However, higher production costs and lower prices are slowing China's domestic milk production.

This has seen China come back to the Global Dairy Trade and buy a little bit more.

There's also talk that the Chinese government might encourage some dairy herd reduction to boost farm gate prices, which could lead to some additional imports.

For New Zealand farmers, things are looking up, however, higher interest rates remain a major challenge.

The average breakeven price assessed by DairyNZ for last season is $7.93/kgMS. The average breakeven price ofr the 2024-25 season is expected to creep back up to $8.07/kgMS with increased debt repayments and tax.

A $9 milk price will provide much-needed relief to farmers. For some it may prompt a little more spending on items such as repairs and maintenance, particulalrly work deferred due to low returns.

Still, the 2024-25 season has another nine months to run. Volatility will remain, but there is a good chance of prices firming.

More like this

Fonterra sticking to $10/kgMS milk price

Fonterra has reaffirmed a forecast milk price mid-point of $10/kgMS for its farmer shareholders, with just over two months of the 2024-25 season left to run.

Featured

Pāmu farm opens gate to urban visitors

For many urban New Zealanders, stepping into Pāmu’s Pinta dairy farm near Taupo last month was the first time they had had the chance to experience farm life up close.

Afimilk appoints new general manager

Afimilk, a global dairy farm management solutions provider, has appointed Justin Miller as the new general manager for New Zealand and Australia.

National

Machinery & Products

Gong for NH dealers

New Holland dealers from around Australia and New Zealand came together last month for the Dealer of the Year Awards,…

A true Kiwi ingenuity

The King Cobra raingun continues to have a huge following in the New Zealand market and is also exported to…

Data crucial to managing water

Watermetrics was formed as a water data collector and currently supplies and services modern technology such as flow meters, soil…

» Latest Print Issues Online

Milking It

Dairy power

OPINION: The good times felt across the dairy sector weren't lost at last week's Beef + Lamb NZ annual meeting.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter