Wednesday, 15 December 2021 08:55

Record milk price is holding

Written by  Sudesh Kissun
Westpac agri economist Nathan Penny says the bank has lifted its 2021-22 farmgate milk price by 10c to $9/kgMS. Westpac agri economist Nathan Penny says the bank has lifted its 2021-22 farmgate milk price by 10c to $9/kgMS.

Last week's rise in global dairy prices has further boosted the chance of a record-breaking $9 milk price for the season.

Whole milk powder prices - the benchmark for Fonterra's milk price - to its farmer suppliers - broke the US$4,000/metric tonne barrier for the first time in six months.

Westpac has lifted its 2021-22 farmgate milk price by 10c to $9/kgMS, at the top of Fonterra's updated forecast range of $8.40 to $9.00/kgMS.

Senior agri economist Nathan Penny believes the lower NZ dollar is likely to prove a windfall gain for farmers.

"The key catalyst for the forecast revisions is our lower forecast track for NZD/USD," says Penny. "We now expect NZD/USD to fall to US$0.66 by mid-2022.

"That's a whopping 8 cents lower than our previous expectation of it rising to US$0.74 at the same stage. "Expectations of an earlier increase in interest rates in the US have put the US dollar on the front food, and we expect that it will make further gains against currencies like the NZD over the next six months."

ASB economist Nat Keall says the bank is retaining its forecast milk price of $8.75/kgMS.

He adds that at this point in the season, a record-high farmgate price is practically guaranteed and every auction where WMP prices simply hold onto the gains they've already made supports that prospect.

"On that front, there is little to suggest that prices will be correcting in the near future.

"Most obviously, the WMP contract slope continues to point to prices maintaining momentum from here."

Keall admits that ASB is "a little bit more cautious" than the bullish futures market, which sees WMP prices lifting and remaining north of US$4,000/MT over much of the rest of the season. But WMP prices have had a tendency to overcorrect to swings in demand and supply, he says.

"Still, there is room for a little upside in our lofty forecast."

More like this

$10 milk price still on

Whole milk powder prices on Global Dairy Trade (GDT) remains above long run averages and a $10/kgMS milk price for the season remains on the card, says ASB senior economist Chris Tennent-Brown.

Featured

Australia develops first local mRNA FMD vaccine

Foot and Mouth Disease outbreaks could have a detrimental impact on any country's rural sector, as seen in the United Kingdom's 2000 outbreak that saw the compulsory slaughter of over six million animals.

NZ household food waste falls again

Kiwis are wasting less of their food than they were two years ago, and this has been enough to push New Zealand’s total household food waste bill lower, the 2025 Rabobank KiwiHarvest Food Waste survey has found.

Editorial: No joking matter

OPINION: Sir Lockwood Smith has clearly and succinctly defined what academic freedom is all about, the boundaries around it and the responsibility that goes with this privilege.

DairyNZ plantain trials cut nitrate leaching by 26%

DairyNZ says its plantain programme continues to deliver promising results, with new data confirming that modest levels of plantain in pastures reduce nitrogen leaching, offering farmers a practical, science-backed tool to meet environmental goals.

National

Machinery & Products

Tech might take time

Agritech Unleashed – a one-day event held recently at Mystery Creek, near Hamilton – focused on technology as an ‘enabler’…

John Deere acquires GUSS Automation

John Deere has announced the full acquisition of GUSS Automation, LLC, a globally recognised leader in supervised high-value crop autonomy,…

Fencing excellence celebrated

The Fencing Contractors Association of New Zealand (FCANZ) celebrated the best of the best at the 2025 Fencing Industry Awards,…

» Latest Print Issues Online

The Hound

A step too far

OPINION: For years, the ironically named Dr Mike Joy has used his position at Victoria University to wage an activist-style…

Save us from SAFE

OPINION: A mate of yours truly has had an absolute gutsful of the activist group SAFE.

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter