Friday, 22 March 2024 13:51

$8 milk price this season 'out of reach'

Written by  Sudesh Kissun
ASB economist Nathaniel Keall. ASB economist Nathaniel Keall.

An $8/kgMS farmgate milk price for this season may be out of reach, according to ASB economist Nathaniel Keall.

With just over two months left in the 2023-24 season and bulk of the season’s products prices, Keall expects little change to Fonterra’s mid-point of $7.80/kgMS. Releasing its half-year results yesterday, Fonterra narrowed its price range to $7.50-$8.10/kgMS but the mid-point remains unchanged.

Keall says Fonterra’s tweak reflects that we are increasingly close to the end of the season, and both upside and downside risks have dissipated.

“Mechanically, the bulk of the season’s product has been priced and the co-op has little further hedging to do.”

ASB’s forecast for the season has been sitting at around $8/kgMS since the beginning of the year, when Fonterra’s midpoint was $7.50/kgMS.

But Keall accepts that it looks like prices might not quite manage to hit that point, having run into resistance at the past couple of dairy auctions. That includes this week, where the overall Global Dairy Trade (GDT) index eased 2.8% and whole milk powder fell 4.2%.

Keall isn’t surprised to see WMP prices pare back some of their recent gains.

“We’ve long noted Chinese demand remains fairly muted and that we probably couldn’t expect South East Asian & Middle Eastern buyers to offset that forever. But we had thought prices might sustain these levels for long enough for the seasons price to hit the $8/kgMS.”

Keall says attention is now largely focused on the price dairy farmers can expect next season.

ASB is forecasting an opening forecast milk price of $8.30/kgMS. Fonterra is yet to come out with an opening forecast milk price for the next season.

More like this

Fonterra's opportunities, risks

At Fonterra's recent annual meeting in New Plymouth, chair Peter McBride spoke on the co-op's changing global operating context and how to manage risk. Here's some of what he said.

Featured

No bird flu on second farm

Biosecurity New Zealand says test results to date from a small free-range layer chicken farm near Dunedin are negative for avian influenza.

No disease on other Mainland Poultry farms

Biosecurity New Zealand has reported no signs of disease on other chicken farms operated by Mainland Poultry in Otago, however testing and monitoring work continues.

National

NZ out of step - report

New Zealand is out of step globally in looking to put a price on agricultural emissions from food production.

Pork imports furore

Pork farmers says a significant influx of imported pork is causing them concern.

Govt limits forestry conversions

Farmers have welcomed the Government’s move designed to limit farm to forestry conversions entering the Emissions Trading Scheme (ETS).

Machinery & Products

More front hoppers

German seeding specialists Horsch have announced a new 1600- litre double-tank option that will join its current Partner FT single…

Origin Ag clocks up 20 years

With roots dating back to 2004, Origin Ag was formed as a co-operative business model that removed the traditional distributor,…

Teat spray price drop

FIL, the animal health and dairy hygiene subsidiary of GEA Farm Technologies, is dropping the price for its chlorhexidine teat…

» Latest Print Issues Online

The Hound

Loud noises!

OPINION: One of the strongest arguments for Act’s Treaty Principles Bill is probably its opponents’ total inability to raise a…

Barks like a dog

OPINION: Landcorp is putting a brave face on its latest result, highlighting its progress on KPIs like climate change and…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter