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The Weekly Dairy Report: Cows begin milking in the north as too much of last years product is unsold

Rural News
The Weekly Dairy Report: Cows begin milking in the north as too much of last years product is unsold

July weather continues to put pressure on feed as managers carefully ration supplies as they plan toward calving, but lower than average soil temperatures slow growth on saved calving pastures.

Whilst many are locked into this years feeding systems, advisers suggest feed should be no more than 5% of total farm costs as budgets and stocking rates are meticulously reviewed, and the price of feed grains and pke are falling steadily.

Northern herds have plenty of calves on the ground now as their season starts, but will be very concerned of reports of last years dairy commodity stocks carried over, both here in NZ and powder stockpiles in China.

Many are having to supplement milking cows with palm kernel, maize, and silage to maximise production, but most are planning to grow their own feed this year, and have reduced stocking rates to achieve this.

Last weeks auction result was described as disastrous on another 10% fall, driven by an even bigger drop for whole milk powder, and the ANZ dropped its forecast to $3.75-$4.00/kg ms, and the BNZ to $3.80.

Open Country Cheese also reacted pessimistically with a $3.65-$3.95 figure that illustrates just how far the fall has gone.

The currency did fall on the back of this poor auction, and economists predict further falls in interest rates, as more debt may be the only solution in the short term.

All eyes will be on Fonterra’s 7th August announcement of the advanced rate which will show the markets true position, and determine the extent of the overdraft pressures for the coming season.

Dairy farmers are being urged to use beef genes for non breeding cows to cash in on strong demand for beef, and increase returns from this byproduct of milking.

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28 Comments

stockpiles, over bought or undersold

trade and product data
http://www.clal.it/en/?section=stat_cina

middle kingdom industry view ex credit suisse (from Jan 15)
https://doc.research-and-analytics.csfb.com/docView?language=ENG&source…

eg conversations with the sales and marketing team regarding buyers.
https://www.youtube.com/watch?v=kTcRRaXV-fg

http://www.farmingshow.com/on-demand/audio/john-wilson-chairman-of-font…

and not so glum - at 5ers
http://www.farmingshow.com/on-demand/audio/nathan-penny-rural-economist…

and
Fonterra Co-operative Group Shares
FCG $4.660

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be quick
http://www.trademe.co.nz/property/rural/auction-920320425.htm

1 The Shanghai Pengxin Group Co Limited (SPGL) intends to restructure the ownership of some of its New Zealand farm assets. To enable such restructure, the Overseas Investment Act 2005 requires SPGL firstly to advertise the assets for sale to a non-overseas person. Those assets comprise:

1.1 ownership of approximately 7885 hectares of predominantly dairy farm land in the North Island of New Zealand, and a conditional agreement to acquire further farm land known as the Lochinver Station in the Central region of the North Island, as described in photos (Table 1&2): and

1.2 rights under a Fiduciary Management Agreement (FMA) to manage SPGL’s 100% shareholding (held through a subsidiary) in SFL Holdings Limited, which through its subsidiary Purata Farming Limited owns farms in the South Island of New Zealand, also described in photos (Table 3). The FMA does not grant any rights to participate financially in SFL Holdings Limited, nor grant any rights to own the shares in SHL Holdings Limited.

2 The North Island farms are owned through subsidiaries by a Hong Kong subsidiary of SPGL, An Yuan Dairy Limited (An Yuan).

3 SPGL is advising that 100% of the shares in An Yuan are available for sale and are offered for sale to persons who are not “Overseas Persons” under the Overseas Investment Act 2005 (Act). The grant of the FMA is also available to persons who are not “Overseas Persons” under the Act. Offers for the shares and the FMA are sought from those persons.

4 Prospective purchasers should note that SPGL reserves its rights to transact, or not transact, on such terms as it sees fit (and that is not obliged to accept any particular proposal). In assessing any proposal SPGL will take account of benefits expected to accrue under its internal restructure proposal.

5 Prospective purchasers should register their interest. They will then be contacted by representatives of SPGL to confirm the outline terms of their offer and to participate in the sale process.

http://www.stuff.co.nz/business/farming/agribusiness/70464860/chinese-c…

http://www.stuff.co.nz/business/farming/agribusiness/70429467/shanghai-…

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Offered for sale on TradeMe? And its a "new" member with no previous trades. LOL.

Does China have an equivalent to April Fools Day?

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thing is 002505:CH Hunan Dakang Pasture Farming Company Limited
http://www.dakangmuye.com/en-us/product/ruye

via the brand Theland already claims the business/farms as theirs
Theland has several self-owned pastures situated in the key dairy regions of New Zealand at 40 degrees north, the same latitude as other best pastures in Australia, Holland, and Ireland. With their unique unspoiled natural environment, these pastures are called "the Golden pastures out of the golden pastures"

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The golden pastures.....jeez bnz entertain a scenario of a $2 payout . I seriously need an emoticon right now.

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Maybe they will all convert to bull beef?

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I can see them drenching the bulls on the rotary. That would be fun.

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At least it would be a low cost option. Must be a nightmare trying to run a dairy farm in a country with such high costs and so much regulation.

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Shot themselves in the foot. Are we next? Thank god we have avoided a fonterra like meat company so far.

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and chatting about it this time last year

http://www.interest.co.nz/news/71265/key-defends-shanghai-pengxin-inves…

http://www.cninfo.com.cn/finalpage/2014-06-18/64148306.PDF
and document page 19.
it would seem that (subject to school boy translation)
there is a BVI new entity put between a HK holding company and NZ holding company, under which the three land investment owing companies sit (Pure 100, NZ Standard Farm [holding Synlait 73.91% - now 100%] and NZ Pasture Group [Crafar]
funds seem to becoming from a raising by a China domestic entity (part of the group higher up), passed to the BVI entity in return for possibly an asset framework agreement and an equity escrow agreement.

and
http://www.interest.co.nz/news/71234/former-act-leader-and-mp-john-bank…

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Even $2 isnt so bad as long as there is a quick and healthy recovery ie $5+? Trouble is what if there is say 4~5 years of <$4? ouch. Just looking around me in Wgtn CBD & malls and 'good" streets I see empty shop fronts and that is a "s". Some of the NZ online businesses I purchase from are selling stuff at or not much above prices I can import from the USA at, that is a big change IMHO. Yet cities are supposed to be doing better than rural NZ? If that's the case it doesnt bode well for our "rock star" economy the only "good bit" is the crazies in some suburbs of Auckland which when it pops will saddle the rest of NZ with its debt, oh joy.

For me its quite simple, National (and indeed Labour before them) are gamblers, praying that the game wont unfold so they get re-elected one more time. I see this time and time again in management they gamble the bad things wont happen.

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Walked past a shop in a mid sized rural town the other day. Saw three people talking in Chinese, the shop the were standing in was being renovated. The rest of the town is struggling with shops closing and these Chinese people were spending up large opening a new shop, good luck to them , more money than sense I'd say.

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A $2 shop?

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Even $2 isnt so bad as long as there is a quick and healthy recovery ie $5+?

With respect steven, a $2 payout on the back of a $4.40 (or whatever Fonterra's final payout for 2014/15 will be, is bad. Not all farmers are farm owners - 2015 Dairy stats show approx 52% of all farmers are sharemilkers - and they do not receive the full payout but are usually fully responsible for labour costs which continue to increase yearly, if for no other reason than the minimum wage increases.

http://www.dairynz.co.nz/media/1357994/quickstats-new-zealand.pdf
edit: web link

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As long as they can hold asset values up in the mean time.

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oh boy.....and the RB only dropped 25, maybe it should have been 100 :(

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wouldn't help, stuck in a deflationary spiral, overproduction across all commodities. Prices will keep falling look at steel, from Stockman

Namely, that big projects which were in the pipeline when commodity prices and profit margins began to roll-over in 2012, are being carried to completion owing to the sunk cost syndrome. This means that available, on-line capacity continues to soar. The poster child for that is the world’s largest iron ore port at Hedlund, Australia. The latter set another shipment record in June owing to still rising output in mines it services——-a record notwithstanding the plunge of iron ore prices from a peak of $190 per ton in 2011 to $47 per ton a present.

example a
http://www.fwi.co.uk/livestock/china-building-100000-cow-dairy-unit-to-…

example b
http://www.stuff.co.nz/business/farming/agribusiness/10574421/Irrigatio…

get the drift, i could go on all day.

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surely it would be more economical to abandon farms and redeploy the capital for some other, more worthwhile prospect? What a waste

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The world is overrun by this sort of nonsense at all levels due to cheap funding costs without responsible recourse to the true capital liability that is exponentially imposed upon citizen's financial resources.

The US has invested $14.7mn in a warehouse facility in Afghanistan that now lies deserted since the Pentagon decided to wrap-up its mission but continued wasting US taxpayers money until the overdue construction was completed, a new audit report reveals. Read more

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Make a great dairy shed

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It was a Q, not a statement, thanks for the clarifcation. Though in terms of who owns that 52% of the land, if they still get their "pound of flesh" the owners of the assets may not be as bad? Sharemilkers on the other hand...

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I guess its a lousy joke. The sale thats not a sale...Would be good to see Michael Fay and the local maori make offers again if only just to see the process drawn out longer. Might put other foreigners off.

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Dairy cockies know that if they use a run beef bull they will calve a week later. With summers as dry as they have been the last 8 or so years thats the last thing they want. Roll on the short gestation herefords...

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Watch that beef job Belle
'Multi-year bear market'

However, market bulls may not have it all their way for long, with feeder cattle potentially poised for a decline which could last for years.

While feeder cattle values have been supported by the need to rebuild the US herd from multi-year lows - encouraged by both better pasture conditions and, until lately, buoyant beef prices – the incentive to boost numbers will ultimately wane.

"Other countries such as Brazil and Argentina are also expanding their herds because of high prices," Mr Roose said.

"Ultimately, that will all come home to roost.

"Feeder cattle are going to go into a multi-year bear market," although that "might be six months to one year out".
http://www.agrimoney.com/feature/live-cattle-prices-hit-13-month-low.-w…

http://www.independent.ie/business/farming/cattle-glut-looming-warn-far…

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Yep bound to happen. Are you doing your bulls this year Andrew? Hell they are expensive to buy at the moment. Hows the Hawkes Bay looking?

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From the Cornwall coast HB looks pretty good, been cold and dry, I wanted to buy some more bulls but they got too expensive so I'm going to offer some free grazing to a mate in Nth Canterbury, where I hear it's super dry. Cornwall is moist most of the time but the pubs are fun, I've been helping a mate do some building on an old barn.

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Well that sounds more fun.

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smoke or fire?

The Australian reports that Camperdown Dairy International has secured a 15-year, $9 billion deal to supply powdered infant formula to China, despite still being in the process of buying grazing land and building factories.

Last week the company was granted Chinese accreditation for its tinned formula, which allows customers to trace the product back to the farm using their smartphones.

http://www.businessinsider.com.au/australian-businesses-are-milking-the…

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