Tuesday, 20 October 2020 05:55

Payout lifts

Written by  Sudesh Kissun
BNZ senior economist Doug Steel. BNZ senior economist Doug Steel.

The forecast milk payout for this season has gone up by 40c and Fonterra farmers can thank Chinese consumers.

The co-operative last week announced a new range of $6.30 to $7.30/kgMS with a new midpoint of $6.80/kgMS. The revised forecast comes just a month after Fonterra announced its annual results.

BNZ senior economist Doug Steel told Rural News that he’s not surprised by Fonterra’s announcement, as “underlying tones” in the dairy markets have been improving in recent weeks.

In the latest Global Dairy Trade (GDT) auction, the price of flagship whole milk powder price topped US$3,000/metric tonne. The New Zealand dollar has also stabilised.

Steel says a stable NZ dollar and strong demand for WMP normally provides upward pressure on the payout.

However, he says the wide range of Fonterra’s forecast payout means “anything could still happen”.

“There’s a wide range of possible outcomes, we are seeing so much uncertainty lingering around...anything could still happen, but for now we are seeing better prices.”

Steel says New Zealand’s close attachment to China, especially in terms of selling them dairy products, is paying dividends.

“They were first in, first out of Covid and the strong demand for WMP there gives us hope going forward.”

Fonterra chief executive Miles Hurrell says the stronger 2020-21 milk price forecast is largely being driven by improved demand in China. He says at a $6.80 milk price, more than $10 billion would flow into regional New Zealand.

More like this

A great outcome - Hurrell

Fonterra chief executive Miles Hurrell says the sale of the co-op’s consumer and associated businesses to Lactalis represents a great outcome for the co-op.

Featured

Poultry industry, Govt sign landmark biosecurity deal

The Government has struck a deal with New Zealand's poultry industry, agreeing how they will jointly prepare for and respond to exotic poultry diseases, including any possible outbreak of high pathogenicity avian influenza (HPAI).

National

Machinery & Products

A reliable, no-fuss workhorse

Showcased with a T7.245 at the recent National Fieldays, New Holland has expanded its T7 tractor range offering in New…

» Latest Print Issues Online

The Hound

Faking it

OPINION: Demand for red meat is booming, while it seems the heyday of plant-based protein is well past its 'best…

M.I.A.

OPINION: The previous government spent too much during the Covid-19 pandemic, despite warnings from officials, according to a briefing released…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter