Rabobank’s Australian-based senior dairy analyst Michael Harvey, who is touring the North Island this week, has crossed the Tasman to meet some of NZ’s dairy farmers to discuss what’s in store for the coming months in the dairy sector.
In mid-June Fonterra forecast a $7/kg MS milk price for 2013/14 — 21% above last season’s milk price.
It also confirmed a higher Advance Rate schedule than normal to help early season cash flows.
International dairy prices reached record highs in April before the market blew off some steam in early June but remain firm enough to deliver a higher farmgate price, Harvey said.
“Milk production will return to growth in key export regions in late 2013 as farmers in the southern hemisphere get a crack at farmgate milk prices 20% to 33% higher than 12 months prior and all farmers see a substantial reduction in the cost of bought-in feed,” Harvey said.
“Prices are likely to drift down as some demand is choked off in emerging markets and buyers at least see a new season commencing in the southern hemisphere but the shift will be limited.”
Speaking at Rabobank functions in Carterton, Hamilton, Putaruru, Morrinsville, Waihi, and Whakatane this week, Harvey said weather conditions have improved markedly through March and April with virtually all key dairying regions in NZ experiencing good rainfall and mild temperatures, which has set farmers up for a better production season in coming months.
“Milk production will return to growth in key export regions in late 2013 . . .”
“Production will then edge marginally above prior year levels as the season builds, with the benefits of a slightly larger herd and the ability to buy feed offsetting mixed cow conditions and low feed reserves,” he said.
“Looking at the global situation, from early 2014 we should see a stronger supply response from most major dairy exporters and this will create bounce in export product availability and provide relief from extreme shortages.”