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

 

Research: ‘Ageing Well’ Science Challenge Launched

Science and Innovation Minister Steven Joyce today launched the Ageing Well National Science Challenge, confirming initial funding of $14.6 million. More>>

ALSO:

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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