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

 

ASB Farmshed Economics Report

ASB Farmshed Economics Report

Cash is king for farmers

• Despite a better milk price forecast, farm cashflows will remain weak this season.

• But falling interest rates are putting cash back in farmers’ pockets.

• Meanwhile, the hot air has been let out of the NZ dollar.

Despite Fonterra’s better opening season milk price forecast, farm cashflows will still face pressure this season, according to the latest ASB Farmshed Economics Report.

“While Fonterra’s opening season forecast of $5.25/kg offers a glimpse of light at the end of tunnel, we expect average cashflows this season to fall by around $1.38/kg or around 22 percent,” says ASB’s Rural Economist Nathan Penny.

“As a result, dairy farm cashflows are likely to continue to remain tight for the next year even if this season’s milk price does exceed expectations.”

On the positive side, lower interest rates are putting cash back in farmers’ pockets. “We think the Reserve Bank is likely to follow up this month’s OCR cut with another in July. In fact, risks are rising that the Reserve Bank doesn’t stop there. Markets, for example, have factored in a 75% chance of a July cut and an 80% chance of another cut by March 2016.”

“With the NZ interest rate outlook confirmed as down, the hot air has been let out of the NZ dollar. Over the last four weeks, the NZD has fallen over 4 cents (5.5%) against the USD. This is lifting New Zealand’s competitiveness in global markets as well as boosting farmer returns in NZ dollars,” concludes Mr Penny.

ENDS


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Reserve Bank: RBNZ To Implement $30bn Large Scale Asset Purchase Programme Of NZ Govt Bonds

The Monetary Policy Committee (MPC) has decided to implement a Large Scale Asset Purchase programme (LSAP) of New Zealand government bonds. The negative economic implications of the coronavirus outbreak have continued to intensify. The Committee ... More>>

ALSO:

Elevate NZ: Venture Fund To Lift Productivity

The Government’s new $300 million venture capital fund - announced in last year’s Budget – is now open for business as the Elevate NZ Venture Fund. Finance Minister Grant Robertson says lifting New Zealand's productivity requires well-functioning ... More>>

ALSO:


COVID-19: Case Confirmed In NZ – Expert Reaction

After spreading across the globe for months, the first case of COVID-19 has been reported in New Zealand. The Ministry of Health says the risk of a community outbreak is low, due to their preparedness and the high awareness of the disease. The Science ... More>>

ALSO:

Agriculture: New Legislation To Boost Organics

New organics legislation will boost consumer confidence and help grow an innovative sector, says Food Safety Minister Damien O’Connor. “The Organics Product Bill, introduced to Parliament this week, aims to increase consumer confidence when purchasing ... More>>

ALSO:

Biodiversity Policy: Misinformation Circulating

Forest & Bird is concerned at misinformation circulating regarding a policy statement aimed at protecting New Zealand’s unique biodiversity. The National Policy Statement for Indigenous Biodiversity is being consulted on by the ... More>>

ALSO: