{"id":44369,"date":"2021-07-05T00:00:00","date_gmt":"2021-07-04T12:00:00","guid":{"rendered":"https:\/\/www.farmersweekly.co.nz\/nz-pastures-lead-the-way\/"},"modified":"2021-07-05T00:00:00","modified_gmt":"2021-07-04T12:00:00","slug":"nz-pastures-lead-the-way","status":"publish","type":"post","link":"https:\/\/www.farmersweekly.co.nz\/news\/nz-pastures-lead-the-way\/","title":{"rendered":"NZ pasture\u2019s lead the way"},"content":{"rendered":"Reading Time: <\/span> 3<\/span> minutes<\/span><\/span>

For now, demand out of China remains strong, a point Fonterra chief operating officer Fraser Whineray made when he spoke to farmers at the Smaller Milk and Supply Herds group conference.<\/p>\n

The global economy was continuing its rebound from covid-19.<\/p>\n

In China, its government recommended children, elderly and pregnant women increase their daily dairy consumption from 300-500g as a way of increasing their daily health.<\/p>\n

\u201cThat\u2019s only 200g, but there\u2019s lots of people,\u201d Whineray says.<\/p>\n

Yoghurts and probiotic products were a key component of that, with a six-fold increase of probiotic sales in China last year.<\/p>\n

\u201cThat might have been only 3.5 tonnes, but when those things sell for $3 million a tonne, it does make a difference,\u201d he says.<\/p>\n

The pandemic still presented both risks and opportunities for the industry and while the new season was just beginning, demand remained strong for milk powders.<\/p>\n

He then made a point that industry critics either wilfully ignore or are ignorant that New Zealand\u2019s WMP\u2019s flavour profile gave it a unique point of difference because of the country\u2019s pasture-based farming system.<\/p>\n

This profile, backed with farm environment plans used to explain the industry\u2019s environmental footprint, was helping it achieve a $300\/t premium over European-made powders.<\/p>\n

Not bad for a much-criticised \u2018commodity\u2019 supposedly without any value-add.<\/p>\n

That demand from China looks set to continue at least in the immediate future.\u00a0<\/p>\n

RaboResearch senior analyst Emma Higgins says the country was continuing to drive global trade. Its healthy appetite for dairy imports acted as the primary pillar of price support in the year-to-date.<\/p>\n

\u201cImport demand in China has been boosted by the ongoing recovery of its food service and retail channels \u2013 with demand in these channels now nearly back to pre-pandemic levels \u2013 and this thirst for dairy imports has helped keep farm gate milk prices on a higher trajectory journey for many farmers around the world,\u201d Higgins says.<\/p>\n

Compounding this is modest-at-best milk supply levels coming out of the Northern Hemisphere, constrained in part by a spike in some feed prices. Those prices were expected to remain firm into next year, she says.<\/p>\n

\u201cAs a result, we anticipate milk supply growth for the \u2018Big 7\u2019 dairy exporters (the US, the EU, New Zealand, Australia, Uruguay, Brazil and Argentina) to expand by just 1.3% in the second half of 2021.\u201d<\/p>\n

The bank was still expecting to see lower Chinese import demand in the second half of the year, despite lifting its forecast in early June to $8\/kg MS.<\/p>\n

Its milk production growth continued to push ahead, which posed a risk of outpacing consumption growth, adding further pressure on inventory levels.<\/p>\n

\u201cThis, in turn, could change China\u2019s buying pattern and have negative implications for dairy commodity prices,\u201d she says.<\/p>\n

Other banks are a shade more optimistic. ASB\u2019s team of economists in its commodities weekly said the recent GDT falls are no reason to panic. WMP prices are still running about 40% ahead of last year and other products are enjoying similar premiums.<\/p>\n

\u201cWhile prices have edged down across all contracts, the curve remains flat rather than downward sloping. While we expect prices to edge down further from their highs, a sharp correction continues to look like an unlikely prospect,\u201d it says.<\/p>\n

To that end, it retained its $8.20\/kg MS forecast and expected global demand to outstrip global supply over the remainder of the year.\u00a0<\/p>\n

\u201cAggressive Chinese purchases have yet to let up and, if they do, we expect the return of other buyers should prevent prices from moving too low,\u201d it says.<\/p>\n

Back in NZ, the new season is off to a positive start for many on the back of double-digit production for April, up 11.6% compared to the same month last year and pushing out total last season\u2019s production 2.5-3% ahead of the 2019-2020 year.<\/p>\n

The exception to this is Canterbury, as farms look to rebuild and recover from the severe flooding that hit many properties. The damage destroyed the winter feed crops on many of these farms, with the MPI appealing to other farmers who can donate feed or assist these farmers with grazing.<\/p>\n","protected":false},"excerpt":{"rendered":"The GDT milk price has been fumbling along over the past month, falling five times in a row after its mid-June auction.\nBut nothing has changed too much in terms of the market fundamentals and prices are still pretty resilient, despite the 1.3% fall on June 15.\n","protected":false},"author":20,"featured_media":5633,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_FSMCFIC_featured_image_caption":"","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","footnotes":""},"categories":[3],"tags":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t