BOOST: ANZ agri-economist Susan Kilsby says milk price outlook had benefited from the fall in the value of the New Zealand dollar to US65c.
THIS season’s milk price forecast by ANZ Research has risen by 50c to $9.30/kg milksolids and for next season the bank’s analysts have added 40c to predict $8.40.
Agri-economist Susan Kilsby said the current season’s forecast was just above the midpoint of Fonterra’s latest guidance range of $8.90 to $9.50.
She said the milk price outlook had benefited from the fall in the value of the New Zealand dollar to US65c, but that a gradual rise to 70c by the end of 2022 was built into the farm gate forecasts for both seasons.
“Dairy prices lifted much faster than anticipated in January, as the impact of tight global supplies for milk started to have a material impact,” Kilsby said.
“Buyers are now well aware that there will not be a lot of additional products available from NZ during the latter part of the milk production season.
“Our milk supply is tracking 3.2% behind for the season to December and production in December was down 5.5% month-on-month.
“Dry conditions throughout January mean milk supplies are likely to be curtailed for much of the remainder of the season,” she said.
Despite her prediction of an above-average milk price for next season, she urged caution, saying high dairy prices have a habit of correcting quickly and that some markets would be currently priced out.
“Overall, the outlook for the Farmgate Milk Price remains very robust in the near-term,” she said.
“Unfortunately, on-farm costs have also risen rapidly, due to rising compliance costs, higher
interest rates and increasingly scarce and expensive labour,” adding this would take the gloss off the record milk price.
