{"id":6061,"date":"2021-10-12T00:00:00","date_gmt":"2021-10-11T11:00:00","guid":{"rendered":"https:\/\/www.farmersweekly.co.nz\/record-farm-returns-predicted\/"},"modified":"2021-10-12T00:00:00","modified_gmt":"2021-10-11T11:00:00","slug":"record-farm-returns-predicted","status":"publish","type":"post","link":"https:\/\/www.farmersweekly.co.nz\/news\/record-farm-returns-predicted\/","title":{"rendered":"Record farm returns predicted"},"content":{"rendered":"Reading Time: <\/span> 3<\/span> minutes<\/span><\/span>

Global food prices are increasing and the farm gate returns for some of New Zealand\u2019s agricultural commodities will set records this season, ANZ economists say.<\/p>\n

<\/p>\n

In their October Agri Focus, agricultural economist Susan Kilsby and chief economist Sharon Zollner say with many commodities in relatively short supply, prices could reach new heights.<\/p>\n

<\/p>\n

Chief among them for New Zealand are milk, sheepmeat, beef and logs, all at high levels in relation to their 10-year averages.<\/p>\n

<\/p>\n

The ANZ World Commodity Price index rose 1.5% in September and in NZ dollar (NZD) terms the increase was 0.4%.<\/p>\n

<\/p>\n

Both indexes resumed an upward trend after two months of small falls following record levels set in June.<\/p>\n

<\/p>\n

\u201cDairy commodity prices have improved in the past few months and supply and demand now appear relatively balanced,\u201d Kilsby and Zollner said.<\/p>\n

<\/p>\n

Despite a slowish start to the season because of wet weather and short cold spells, if the market remains in balance, it bodes very well for the farm gate milk price.<\/p>\n

<\/p>\n

ANZ has lifted its milk price forecast by 50c to $8.20\/kg milksolids in response to the higher commodity prices and less appreciation than expected for the NZD.<\/p>\n

<\/p>\n

The exchange rate against the US dollar has bounced around 70c recently as trader appetites for riskier currencies has been muted.<\/p>\n

<\/p>\n

ANZ currency analysts are picking a rise to 72c by the end of the year, which will nibble farm gate returns, but world economic growth and the risk mood are very hard to predict.<\/p>\n

<\/p>\n

\u201cIf dairy commodity prices can be maintained near current levels through to January, then this will considerably increase the probability of delivering a higher milk price that we currently have forecast,\u201d they said.<\/p>\n

<\/p>\n

Milk production worldwide is contracting and in the United States and Europe farmers face environmental regulations and labour constraints.<\/p>\n

<\/p>\n

Farm gate lamb prices currently above $9\/kg may have run ahead of the strength in returns from export markets because processors want to secure what they can from limited numbers.<\/p>\n

<\/p>\n

Cheaper cuts, typically sold to China, are now worth more than before the covid pandemic.<\/p>\n

<\/p>\n

More expensive cuts like French racks may not have recovered fully but demand is improving as vaccination rates rise and confidence returns to eating out.<\/p>\n

<\/p>\n

\u201cLooking ahead to the main processing season, we do expect to see farm gate prices retreat from their current lofty levels, but at this point it looks like peak season prices will be stronger than last season and match, or even exceed, 2018 and 2019,\u201d they said.<\/p>\n

<\/p>\n

The forecast is for $7.40 weighted average for the lambs in the season ending September 2022, which if achieved would be a record.<\/p>\n

<\/p>\n

ANZ believes the recent strength in international markets for beef means that current schedule prices for bull and steer slightly above $6\/kg CW in the North Island and slightly below in the South Island are easily justified.<\/p>\n

<\/p>\n

\u201cWe anticipate beef prices will remain elevated in the year ahead, as the tight global supply situation looks unlikely to change anytime soon,\u201d they said.<\/p>\n

<\/p>\n

If schedules remain above $5.50 then record annual returns for cattle will be set this season.<\/p>\n

<\/p>\n

Farm gate venison schedules have improved to around $6.60\/kg but remain about 20% down on the five-year average.<\/p>\n

<\/p>\n

The chilled season in Europe is opening but high energy prices are holding back consumers in high-end dining.<\/p>\n

<\/p>\n

Locally-produced feed grains are in short supply and any wheat and barley in the silo is worth $450\/tonne.<\/p>\n

<\/p>\n

Imported palm kernel expeller is around $360 and demand is strong from the dairy industry, ANZ said.<\/p>\n

<\/p>\n

In-market A-grade log prices have recovered to $175\/cu m and are about $10-$15 below recent record levels, but China\u2019s importers are having to pay 40% of that price in greatly increased freight costs.<\/p>\n

<\/p>\n

Wharf gate prices for unpruned logs in NZ are around $130 and the backlogs at ports were cleared during covid shutdowns on the roads.<\/p>\n","protected":false},"excerpt":{"rendered":"Global food prices are increasing and the farm gate returns for some of New Zealand\u2019s agricultural commodities will set records this season, ANZ economists say.\n","protected":false},"author":22,"featured_media":6062,"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