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

 


GlobalDairyTrade: one of a bad news triple-pack

16 July 2014

GlobalDairyTrade: one of a bad news triple-pack

While today’s fall in the GlobalDairyTrade auction platform reflects the most perfect global production season in many years, Federated Farmers anticipates it could lead to downwards revision in Fonterra’s benchmark forecast of $7 per kilogram of Milk Solids (kg/MS).

“The reality is that the world is having a near-perfect production season with Europe and the Americas having a blinder,” says Andrew Hoggard, Federated Farmers Dairy chair.

“The fall in GlobalDairyTrade reflects supply and demand. With good weather, high milk prices and grain availability, global dairy production has ramped up.

“While GDT Prices may have come off there is no milk lake of yesteryear. The world needs to grow a lot more than New Zealand’s annual production every year just to meet demand.

“In the short term, I would recommend dairy farmers start planning for payout forecasts being predicted by the banks of $6 to $6.25 kg/MS. We need to remember $6 kg/MS is the practical breakeven for about twenty percent of the industry with high production costs.

“Be conservative by focussing on debt and prioritising productive investment.

“This volatility in the payout shows that when politicians start mouthing off about new taxes specifically for farmers, without a clear objective of what they could achieve aide from being affordable in one year, they miss the reality that good years usually alternate with bad years.

“In addition to resisting bad policy, Federated Farmers has fully got the backs of our members when it comes to keeping council rates, fees and polices in check.

“What we’re going through with GDT reflects the reality of being an exporter. If New Zealand had Samsung’s global HQ in Dannevirke, I am certain there’d be a gnashing of teeth over its failure to dent Apple or the threat of Microsoft’s resurgent Nokia.

“No matter what you export, dairy, meat or tourists, we’re not being helped by the Kiwi dollar which only amplifies the pain. The dollar ought to be tracking down with the GDT and while it dropped a bit today, the Kiwi dollar does remain overvalued.

“Then again, a high dollar makes for cheap overseas holidays, LCD televisions and puts a lid on petrol prices.

“We are hoping the Reserve Bank is taking note with our interest rates seemingly decided by Auckland’s house market and the Christchurch rebuild. It makes for a triple whammy if the forecast payout heads downhill, a high dollar and the risk of an official cash rate hike.

“The reality is that there will be a belt tightening. It won’t surprise me if Federated Farmers’ New-Season Farm Confidence Survey, being released Sunday, shows a big fall in dairy farmer morale,” Mr Hoggard concluded.


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news