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

 

The return of milk scarcity – Rabobank on dairy

Media Release September 27, 2012 1

The return of milk scarcity – Rabobank on dairy

The global dairy market appears to be heading for a period of renewed supply scarcity in the coming 12 months, according to Rabobank.

Rabobank senior dairy analyst Hayley Moynihan says the impetus for tightening emanates largely from the supply side, where low milk prices, extreme feed costs and pockets of unfavourable weather are expected to slow growth in milk production in export regions.

“We fear that much of the market has been lulled into a false sense of security by the phenomenal growth seasons we saw late in 2011 and early 2012, with the next 12 months to provide a rude awakening,” Ms Moynihan says.

“The slowdown in milk production growth in export regions will be sufficient to undershoot even the modest growth in consumption that we expect in advanced economies – given the sobering economic outlook in the EU and US.”

Ms Moynihan says this will reduce the exportable surplus available from the ‘Big Seven’ export regions of the world (EU, US, New Zealand, Australia, Argentina and Brazil) in the closing months of 2012 and the first half of 2013 – the first such reductions in more than four years.

“With little excess inventory in the market, the equation then becomes simple – any increase in import demand from deficit regions will create supply shortages, with the extent of the shortage fuelling an appetite for imports,” she says.

Factoring in a modest planned increase in imports over the next 12 months from key buying regions, Rabobank expects prices to rise substantially in the international market in order to bring about the demand rationing needed to balance the market and move prices into alignment with the rallies already evident in US and EU wholesale pricing.

Locally in New Zealand, the new 2012/13 season has started off well. Dairy farms and cows are positioned well for a good start to the season and climate has been relatively kind so far, Ms Moynihan says.

“Milk flows were around 13 per cent high than the previous year for the three months to August,” she says.

“However, these months represent the seasonal low-point for milk supply – New Zealand produces only as much milk as Minnesota over this period – and it would be unwise to expect such growth to continue.”

Rabobank expects the strength of the New Zealand season will largely be determined by the spring flush over coming months and the capacity of industry to match the phenomenal shoulder period that followed the flush last season.

Fonterra’s forecast milk price for the season was moved five per cent lower in August to NZD 5.25/kg Milk Solid and now sits 13 per cent below last season’s closing level.

“With most investments in herd and pasture for the new season already made, this wont impact immediate production and prospects,” Ms Moynihan says.

“But, at this price there is little incentive to purchase additional feed to extend lactation later in the season should bad weather reduce pasture growth.”

Ms Moynihan says that replicating last year’s “phenomenal” production levels will also get harder as the year progresses, given the exceptional combination of fabulous weather and higher pricing in place at that time.

Rabobank New Zealand is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 110 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 48 countries, servicing the needs of approximately 10 million clients worldwide through a network of more than 1600 offices and branches. Rabobank New Zealand is one of the country's leading rural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 31 branches throughout New Zealand.

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

DIY Law: Government Exempts Some Home Improvements From Costly Consents

Homeowners, builders and DIYers will soon have an easier time making basic home improvements as the Government scraps the need for consents for low-risk building work such as sleep-outs, sheds and carports – allowing the construction sector ... More>>

ALSO:

Media Awards: The New Zealand Herald Named Newspaper Of The Year, Website Of The Year At Voyager Media Awards

The New Zealand Herald has been labelled a “powerhouse news operation” as it claims the two biggest prizes – Newspaper of the Year and Website of the Year – along with many individual awards at the 2020 Voyager Media Awards Website of the ... More>>

ALSO:

ASB Bank: ASB Takes The Lead Again With New Low Home Loan Interest Rate

ASB has moved again to support its customers, cutting a number of home loan rates, including the two-year special rate to a new low of 2.69% p.a. Craig Sims, ASB executive general manager Retail Banking says the reduced rate will be welcome news for many ... More>>

ALSO:

Nathan Hoturoa Gray: The Problems With Testing And Case Statistics For Covid-19

To begin to understand disease transmission in a country requires adequate testing of your population with properly vetted, accurate tests. As the world struggles to find what 'adequate percentage' of the population is necessary, (estimates predict ... More>>

ALSO:

RNZ: Fletcher Building To Lay Off 1000 Staff In New Zealand

The construction company will cut around 10 percent of its workforce as it struggles with the fallout from Covid-19. More>>

ALSO:

Can Pay, Won't Pay: Cashflow Moves Urged

Government Ministers are asking significant private enterprises to adopt prompt payment practices in line with the state sector, as a way to improve cashflow for small businesses. More>>

ALSO:

Gordon Campbell: On Why We Should Legally Protect The Right To Work From Home

For understandable reasons, the media messaging around Level Two has been all about “freedom” and “celebration”, but this is not necessarily going to be a universal experience. When it comes to workplace relations, Level Two is just as likely to ... More>>

ALSO:


Telecoms: Spark Welcomes Spectrum Allocation And Prepares For 5G Rollout Over The Next 12 Months

Spark welcomes spectrum allocation and prepares for 5G rollout over the next 12 months Spark today welcomed the announcement of the direct allocation process of 5G spectrum, with the Company to be offered management rights to 60 MHz of 3.5 GHz ... More>>

ALSO:


Trade: Record Monthly Surplus As Imports Dive

Imports in April 2020 had their biggest fall since October 2009, resulting in a monthly trade surplus of $1.3 billion, Stats NZ said today. “This is the largest monthly trade surplus on record and the annual goods trade deficit is the lowest ... More>>

ALSO:


Media Blues: Stuff Chief Executive Buys Company For $1

Stuff chief executive Sinead Boucher has purchased Stuff from its Australian owners Nine Entertainment for $1.
The chief executive was returning the company to New Zealand ownership, with the sale is expected to be completed by 31 May.
"Our plan is to transition the ownership of Stuff to give staff a direct stake in the business as shareholders," Boucher said in a statement.... More>>

ALSO:

RNZ: Bar Reopening Night 'much, Much Quieter'

Pubs and bars are reporting a sluggish first day back after the lockdown, with the fear of going out, or perhaps the joy of staying home, thought to be a reason for the low numbers. More>>

ALSO:

Stats NZ: New Zealand’s Population Passes 5 Million

New Zealand's resident population provisionally reached 5 million in March 2020, Stats NZ said today. More>>

NIWA: Seven Weeks Of Clearing The Air Provides Huge Benefits: Scientist

Seven weeks of lockdown has provided evidence of how pollution can vanish overnight with benefits for the environment and individuals, says NIWA air quality scientist Dr Ian Longley. Dr Longley has been monitoring air quality in Auckland, Wellington ... More>>

ALSO:

Government: Tax Changes Throw Cash Lifeline To SMEs

A significant package of tax reforms will be pushed through all stages in Parliament today to throw a cash flow lifeline to small businesses. More>>

ALSO:

Statistics: Some Indicators Pick Up As New Zealand Moves Out Of Lockdown

New Zealanders moved around more in the main centres and used more fuel and power while weekly exports held up as the country left the COVID-19 level 4 lockdown, Stats NZ said today. COVID-19 data porta l, our new webpage, includes about 40 near-real-time ... More>>

ALSO:



University Of Canterbury: Astronomers Discover The Science Behind Star Bursts That Light Up The Sky

University of Canterbury (UC) astronomers are part of an international team that has revealed how explosions on the surface of a white dwarf star can increase its brightness by thousands or millions of times making it look like a new star. For ... More>>

RNZ: International Passenger Numbers At Auckland Airport Drop 95 Percent

Auckland Airport says international passengers numbers have dropped more than 95 percent in the first 20 days of April over the year earlier. More>>

ALSO: