Home' NZ Dairy Farmer : March 2014 Contents AN expected softening in milk prices
in mid 2014 has bank economists
predicting a milk price of around
$7/kg milk solids for the 2014-15 season.
This weakened payout is predicted
to occur when northern hemisphere
production peaks later this year. The
resulting extra supply would push prices
down, Westpac senior economist Anne
Boniface said. The bank had forecast an
opening price of $7.10/kg MS for the
''We're expecting dairy prices to soften
a little bit over the course of 2014 as
global supply increases.
''It was still a good price. It's not quite
as good as 2013-2014, but not too bad
Westpac recently upgraded the fore-
cast from $6.70 because of the continued
demand for dairy products.
This price also assumed the gap
between milk powder and cheese prices
would return to historic normals and
was contingent on the New Zealand
dollar staying high, she said.
''The New Zealand dollar can do
some unusual things and we're forecast-
ing the New Zealand dollar to stay rela-
tively high and that's on the back of what
we expect will happen to New Zealand
interest rates and the New Zealand
economy is performing pretty well.''
BNZ economist Doug Steel predicted
the payout to drop ''somewhere below $7/
kg MS'', but emphasised many variables
could occur before the start of the new
''Our best guess is that it falls but we're
open to surprises along the way.''
He, too, cited increased global milk
production as the cause of the price fall.
He also questioned if the demand for
dairy products, particularly from China
''The question is whether the Chinese
dairy milk supply bounces back from
its horrible season last season so that
the demand for imports is not quite as
The forecast could also be affected by
current low US grain prices, which made
it profitable for farmers to increase their
production, the removal of European
Union milk quotas in early 2015, New
Zealand's weather and currency move-
That fall was premised on a 25 per
cent drop in international dairy prices, he
said. Milk prices had held up well over
the past six months, based on the last
''The question is how long before you
see some sort of response from global
Steel said it could be another six
months before there was any downward
pressure on prices. ''Who knows, maybe
the Chinese demand structural story
continues to dominate and prices hold up
a lot better.''
If the world went into another econom-
ic downturn then New Zealand's floating
currency meant any fall in international
milk prices would see the dollar fall and
would insulate any downside to payouts.
ANZ's February Agri Focus report
had an opening forecast of around the
low $7/kg MS mark for the new season
was ''a real possibility''.
''Combined with this year's record
$8.40/kg MS, such a result would ensure
strong farm-gate cash flow well into
It pointed to a downward price adjust-
ment that was likely in the second quarter
of this year when New Zealand dairy
farmers look to extend lactation for as
long as possible and Northern Hemi-
sphere production peaked.
4 The Dairyman March 2014
THE New Zealand Dairy
Industry Awards is building
in excitement with the first
regional winners due to be
announced on March 1.
Judging was held last month
throughout the 11 regions:
Waikato, Bay of Plenty,
Central Plateau, Taranaki,
Manawatu, Hawkes Bay/
Wairarapa, West Cost/Top of
the South, Canterbury/North
Otago, and Southland/Otago.
Nearly 300 entries have
been received in the 2014
New Zealand Dairy Trainee of
the Year competition, boosting
overall entries in this year's
Dairy Industry Awards to a
National convener Chris
Keeping says the response has
''It is such a positive indica-
tor for the dairy industry to
have so many young people
putting themselves forward.''
Mrs Keeping says 292
entries were received in the
trainee contest, up from 251
last year and just over 100 in
2008 when the contest began.
''Interest in the trainee
contest is growing each year
and we like to think the awards
experience does help to
motivate, lift confidence and
enhance industry enthusiasm
for those who enter.''
She says all trainee entrants
have to be under 30 and have
been in the industry less than
''It is extremely competitive
for those that enter. One of the
best bits about it is the friends
they make with other trainee
entrants,'' Mrs Keeping says.
A total of 115 entries was
received in the 2014 New
Farmer of the Year contest,
and 165 entries in the New
Zealand Farm Manager of
the Year. Regional awards will
be held next month and the
national final on May 9.
The Dairy Industry Awards
are supported by national
sponsors Westpac, DairyNZ,
Ecolab, Federated Farmers,
Fonterra, Honda Motorcycles
NZ, LIC, Meridian Energy,
Ravensdown, RD1, Triple-
jump, along with industry
partner Primary ITO (former-
ly AgITO). Go to www.dair-
Bumper dairy trainees to boost awards
We're expecting dairy prices to
soften a little bit over the course of
2014 as global supply increases.
Milk price predicted to fall to $7
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