Dairy drop takes its toll

 According to Westpac’s quarterly regional economic survey, consumers in Waikato and Southland have fallen back into pessimism for the first time since late 2012/early 2013, when Waikato was gripped by drought and Southland was facing the possible closure of the Tiwai Point aluminium smelter.

But in Canterbury, the second-biggest dairying region, economic confidence rose slightly in the quarter, making it by far the most optimistic.

Westpac senior economist Felix Delbruck says reconstruction activity is helping confidence in Canterbury, though the region’s economic confidence has moderated from the dizzying heights of a year ago.

Delbruck says in most other regions, economic confidence has also lost some of its lustre in the last six months, when much of the country seemed to be basking in the prospects of a stellar dairy season. 

“Optimists continue to outnumber pessimists by a decent margin in Auckland, Wellington and Bay of Plenty, but elsewhere the mood is now fairly subdued.”

The last Global Dairy Trade auction resulted in average dairy prices rising 3.6% higher than the previous event.

 Compared to the last trading event, all commodity prices firmed with significant movements in butter (up 13.2%) and buttermilk powder (up 10.5%); anhydrous milk fat was up 6.8%, rennet casein up 4.2%, cheddar up 3.2%, skim milk powder up 2.8% and whole milk powder up 1.6%.

However, Fonterra says the GDT Price Index for the financial year to date was down 45% on the same period last year.

The next GDT auction will be this week.