$10/kgMS milk price tipped for strong 2025/26 season start
The 2025-26 season is set to start on a high and a $10/kgMS opening forecast milk price isn't being ruled out.
New Zealand commodity prices are likely to feel downward pressure over the year, says ASB senior rural economist Nathan Penny.
In his Commodities Weekly report, Penny says 2019’s more modest outlook follows relatively positive prices over 2018.
The average level over 2018 was comfortably above the 10-year average in both USD (+4.7%) and NZD (+12.3%) terms.
However, economic growth in NZ’s major export market, China, is slowing, and Penny expects this slowing to lead to more modest demand for NZ’s commodities.
“Recall that China accounts for around a fifth of NZ’s overall goods exports and larger amounts for the log, dairy and sheepmeat sectors,” he says.
Moreover, NZ agricultural production is booming, with the extra supply also weighing on commodity prices.
Penny notes that in particular, spring 2018 weather was surprisingly good and the weather has continued in this vein so far this summer. As a result, agricultural production is likely to remain firm over coming months.
“For example, we expect record-high dairy production this season. Indeed with the bumper dairy production in mind, we revised down our 2018/19 milk price forecast twice late last year.”
Meanwhile, the global economy is also slowing, hinting at a broader slowing in demand for NZ export commodities. In the US, the trade tensions with China combined with rising interest rates are causing financial market volatility. While over the Atlantic, ongoing Brexit concerns are weighing on the UK and European economies.
Despite these headwinds, there are positive offsets in play, says Penny.
“First up, the NZ dollar is at a supportive level and likely to mostly stay that way over 2019. As a result, commodity prices in NZD terms, if not USD terms, are still likely to remain above long-term averages.
“Also, while overall Chinese economic growth is slowing, we expect the household sector to hold up better than the industrial and export sectors.”
The CEO of Apples and Pears NZ, Karen Morrish, says the strategic focus of her organisation is to improve grower returns.
A significant breakthrough in understanding facial eczema (FE) in livestock brings New Zealand closer to reducing the disease’s devastating impact on farmers, animals, and rural communities.
Farmer co-operative LIC has closed its satellite-backed pasture measurement platform – Space.
OPINION: The case of four Canterbury high country stations facing costly and complex consent hearing processes highlights the dilemma facing the farming sector as the country transitions into a replacement for the Resource Management Act (RMA).
The 2024-25 season apple harvest has “well and truly exceeded expectations”, says Apples and Pears NZ chief executive Karen Morrish.
Through collaborative efforts with exhibitors, visitors, and industry partners, Fieldays says it is reaffirming its commitment to environmental responsibility with new initiatives for 2025.
OPINION: The Greens aren’t serious people when it comes to the economy, so let’s not spend too much on their…
OPINION: PM Chris Luxon is getting pinged lately for rolling out the old 'we're still a new government' line when…