Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Dairy prices may dip as record payouts stoke more production

Dairy prices may dip as record payouts prompt farmers to boost milk production

By Tina Morrison

March 28 (BusinessDesk) – Dairy prices will probably decline over the last few months of the New Zealand season as farmers ramp up milk production to benefit from record payouts.

Prices generally hold up on lower volumes heading into the end of the season in May, however volumes will be higher than normal this year as farmers had favourable growing conditions in the lead-up to the main producing season and bought extra feed to increase milk production in anticipation of higher prices, said ASB Bank rural economist Nathan Penny.

Auckland-based Fonterra Cooperative Group, the world’s biggest dairy exporter, last month raised its payout to farmer suppliers to a record level on the back of strong global demand. New Zealand dairy farmers will probably produce 11 percent more milk this season than last season, which will equate to around a 9 to 10 percent increase in volume for Fonterra, ahead of the dairy group’s forecast for a 7.5 percent increase in volume, ASB says.

“Farmers are pretty motivated to get more milk out of their cows given what Fonterra is paying them,” Penny said. “If our production forecast is right, once this milk hits markets, dairy prices will come under further pressure in the tail end of the New Zealand season.”

Whole milk powder fell to US$4,439 a tonne in Fonterra’s most recent fortnightly GlobalDairyTrade auction this month from about $5,000 in February and will probably head down towards $4,000 a tonne over the next few months as the extra volumes hit the market, Penny said. Prices will likely recover again after the end of the season as milk supply peters out, he said.

“Markets plan ahead, they know that New Zealand volumes will decrease at this time of year so they buy in advance of that - now there is going to be more than they anticipated in the market at this time of year, so that will put downward pressure on prices,” Penny said.

Fonterra has the ability to stockpile milk powder for a few months, giving it some flexibility over when it releases the extra volumes, Penny said.

“There’s more production coming Fonterra’s way - it’s just a question of when Fonterra decides to put that milk into the market,” he said. “Eventually they have to get it out the door which means there will be that pressure on prices.”

Dairying makes up almost a third of New Zealand’s export earnings.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Sky City : Auckland Convention Centre Cost Jumps By A Fifth

SkyCity Entertainment Group, the casino and hotel operator, is in talks with the government on how to fund the increased cost of as much as $130 million to build an international convention centre in downtown Auckland, with further gambling concessions ruled out. The Auckland-based company has increased its estimate to build the centre to between $470 million and $530 million as the construction boom across the country drives up building costs and design changes add to the bill.
More>>

ALSO:

RMTU: Mediation Between Lyttelton Port And Union Fails

The Rail and Maritime Union (RMTU) has opted to continue its overtime ban indefinitely after mediation with the Lyttelton Port of Christchurch (LPC) failed to progress collective bargaining. More>>

Earlier:

Science Policy: Callaghan, NSC Funding Knocked In Submissions

Callaghan Innovation, which was last year allocated a budget of $566 million over four years to dish out research and development grants, and the National Science Challenges attracted criticism in submissions on the government’s draft national statement of science investment, with science funding largely seen as too fragmented. More>>

ALSO:

Scoop Business: Spark, Voda And Telstra To Lay New Trans-Tasman Cable

Spark New Zealand and Vodafone, New Zealand’s two dominant telecommunications providers, in partnership with Australian provider Telstra, will spend US$70 million building a trans-Tasman submarine cable to bolster broadband traffic between the neighbouring countries and the rest of the world. More>>

ALSO:

More:

Statistics: Current Account Deficit Widens

New Zealand's annual current account deficit was $6.1 billion (2.6 percent of GDP) for the year ended September 2014. This compares with a deficit of $5.8 billion (2.5 percent of GDP) for the year ended June 2014. More>>

ALSO:

Still In The Red: NZ Govt Shunts Out Surplus To 2016

The New Zealand government has pushed out its targeted return to surplus for a year as falling dairy prices and a low inflation environment has kept a lid on its rising tax take, but is still dangling a possible tax cut in 2017, the next election year and promising to try and achieve the surplus pledge on which it campaigned for election in September. More>>

ALSO:

Job Insecurity: Time For Jobs That Count In The Meat Industry

“Meat Workers face it all”, says Graham Cooke, Meat Workers Union National Secretary. “Seasonal work, dangerous jobs, casual and zero hours contracts, and increasing pressure on workers to join non-union individual agreements. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news