GDT drop not a ‘disaster’

"We'd love to see a plus sign for a change but at least it seems to be tracking in the direction Rabobank has projected," says Andrew Hoggard, Federated Farmers Vice-Chairperson.

"I don't expect this latest result will affect the payout forecast in the near term. What will be critical is the expected market recovery in the New Year.

"Unless we have WW3 or a pandemic this isn't a 'milk and disaster' sound bite. Memories seem to be short these days but there are no lakes of milk powder or mountains of butter anywhere.

"It is true that since the new season started on 1 June prices are down 21.3%, but that reflects a near perfect production season everywhere on earth.

"While down isn't a flash word to use, neither was the first half of the 2012/13 season either. A season we seem to be shadowing because in the first half of 2012/13, prices averaged US$3,127 per metric ton yet the second half saw the average grow to $4,213.

"It is why we're not hitting the panic button just yet, especially when there were signs of life in the latest auction.

"We saw more buyers and they bought more product so things are looking up, if not the price yet.

"Looking at the latest GDT result, the 48,380 metric ton sold is the biggest quantity in 2014/15 season to date. It is also the biggest volume since 3 December 2013. There were also 153 successful bidders, also the most in the current season and the most since 1 April.

"When you've got volume and bidders that's a good indication prices may be close to stabilising.

"We'd recommend farmers review their cashflow using the 2012/13 season as a yardstick," Hoggard says.