14 November 2014
ASB Farmshed Economics Report: A case of if, not when, for higher interest rates
• Interest rates to stay low for
• Uncertain times ahead for dairy
• Meat prices continue to shine
Interest rates are staying lower for longer according to the latest ASB Farmshed Economics Report.
“Farmers have been keeping a close eye on the financial markets. With the RBNZ signalling a long pause on OCR rises in the current low inflation environment, it’s looking like interest rates will be staying lower for longer,” says ASB Rural Economist Nathan Penny.
“We expect the OCR to hold at 3.5% until September 2015 and now predict it will peak at 4%.”
It's been a long hard road for dairy but whole milk powder prices may have finally hit their bottom.
“Prices for key product whole milk powder have now increased in the last two consecutive auctions, but this positive sign of a potential bottom has yet to show up amongst other dairy prices. For our $5.10/kg forecast of this season’s milk price to hold, global prices need to lift over coming auctions. We certainly expect a rebound in prices – but it’s a matter of when.”
In comparison, meat prices continue to shine, with beef prices hitting fresh highs.
Farmshed Economics is a monthly report that gives ASB’s economic take on recent rural developments and includes our outlook for rural commodities and the relevant financial markets. Each quarterly Farmshed Economics will have a special feature on a relevant topic. The full report is attached and will be available online. If you would like to receive ASB updates and reports by email: https://reports.asb.co.nz/register/index.html