Eroding share of milk worries Fonterra shareholders
Fonterra shareholders are concerned with a further decline in the co-op’s share of milk collected in New Zealand.
According to ASB Bank's Farmshed economics report, while meat markets are healthy, there are signs of an improving wool markets too.
"Lamb prices recovered steadily over the season just gone, rising some 9% for the season as a whole," it says.
"While lamb markets are quiet for now, we expect lamb price increases kick back into gear as we get closer to Christmas. Most of the factors supporting prices remain in play.
"Beef prices also remain rock solid. And similarly, factors supporting beef prices are set to stay in place for the rest of the year and well into 2015. Meanwhile, wool prices are creeping higher, with improving Australian and US housing markets generating demand for carpets and thus for coarse wool."
However, the outlook for dairy looks weaker. Dairy prices continue to slide. Ten of the last 12 dairy auctions have now recorded overall price falls.
ASB says these falls emphasise how exceptional the season just gone really was for both dairy prices and in turn for dairy production.
"Now though, for dairy farmers it's getting quickly back to reality," it says.
"The dairy price falls have been more than we and others expected. Factoring in the recent falls, we have revised down our milk price forecast for the 2014-15 season by 80 cents to $6.20/kgMS.
"That said, if current trends continue, our milk price forecast could head lower. As such, the possibility of a sub-$6.00 milk price for the 2014-15 season is rising," the bank says.
