Tuesday, 04 May 2021 09:55

$8 payout predicted for 21-22

Written by  Sudesh Kissun
Westpac senior agri economist Nathan Penny. Westpac senior agri economist Nathan Penny.

At least one bank is forecasting an $8 opening forecast farmgate milk price for the next season.

Dairy prices are holding most of their gains from earlier in the year and remain remarkably high, a good omen for the coming season.

Westpac senior agri economist Nathan Penny is forecasting an $8/kgMS opening forecast and ASB has boosted its forecase by 20c to $7.50/kgMS.

Penny now expects dairy prices to start the 2021-22 season firmly on the front foot.

Penny points out that in milk price terms, the last GDT auction and NZ dollar rate equated to a milk price of over $9/kgMS. Since March, Westpac has lowered its NZD/USD forecasts by around two cents over the season, adding further upward impetus to milk price forecasts in NZ dollar terms.

"From the stronger starting point, we have built in a moderation of global dairy prices over the New Zealand dairy season.

"Specificallly, we forecast for whole milk powder prices (WMP) to fall by 18% over the season. In other words, we have built in a supply response to the higher milk price."

Another factor that could keep milk prices high is a very modest supply response to the high milk price by historical standards.

"As such we expect that dairy prices will remain stronger for longer," says Penny.

He notes that in New Zraland, dairy supply is constrained for a range of reasons, including environmental constraints, limits on cow numbers, limits on fertiliser usage and higher compliance costs.

"As a result, we expect modest production growth next season of 2%."

On the demand side, Penny expects robust demand to continue.

More like this

Bumper price rises cemented

With just one more Global Dairy Trade (GDT) auction left for the 2020-21 season, bumper dairy price gains recorded in March remain intact.

Flat dairy prices is good news

Dairy prices at last week's Global Dairy Trade auction remained largely unchanged but the news remains positive for New Zealand dairy farmers.

A brighter outlook for venison?

Improved market conditions for venison are expected for the 2021 season, according to industry body Deer Industry NZ (DINZ).

Payout on the rise

Farmgate milk prices offered by processors continue to soar on the back of strong global demand for dairy products.


An 'amaizing' change

The success of some of the early Māori adopters in the kiwifruit industry is starting to catch on.

Machinery & Products

Made in NZ... Hansen Products

Made in New Zealand looks at the wealth of design and manufacturing ability we have in this country, producing productive…

New models mark seventh decade

Celebrating its 70th year – and having already released the fifth generation A Series in January – Valtra has just…

Kubota's new autumn offerings

Kubota, which is gaining traction in the agricultural sector with an ever-broadening portfolio, has announced some additions for autumn.

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Bad company

The Hound is among many in the agriculture sector, including many of our top scientists, who are somewhat cynical claims…


OPINION: This old mutt wonders what it is about tall, balding, ex-Fonterra executives and their (non) ability to handle life…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter