The ANZ economics team has raised its farmgate milk price forecast for the current season by 55c to $7.70/kg milksolids and begun next season’s predictions with $8.50.
Agricultural economist Susan Kilsby said the relatively weak New Zealand dollar is helping the milk price, with only a gradual firming of the currency expected over the current season.
“Global demand for dairy products remains subdued due to weaker economic conditions,” she said.
“Pricing lifted quickly earlier in the season but there has been some sideways movement recently.”
The El Niño forecast has not yet delivered the expected drought. Dairy farmers have plenty of feed on hand and supplementary feed is being conserved.
“Dairy prices are not high enough to stimulate a surge in production in the other major dairy
exporting regions, namely the United States and the European Union.
“Milk production in China is reported to be higher, but there are also numerous reports of farms struggling financially and therefore this will curb future production growth.”
The ANZ revised forecast of $7.70 assumes that commodity prices will rise for the remainder of the season. The NZD effects will be felt more in the following dairy season.