The Weekly Dairy Report: Further falls at auction reflects plentiful global milk supplies

Last weeks rain was welcomed by regions, but still the drought areas of North Canterbury missed decent volumes and remain under stress with feed supply.

With mild conditions returning after the rains, winter feed crops have responded well, and with careful planning and a milder winter, prospects now look better for winter cow grazing.

New Zealand’s milk production is predicted to be up 1.45% on last year, with the drought impact less than was first thought, but both Westland Milk Products and Fonterra lowered this year’s predicted payout, as the market for milk commodities softened further.

Real concerns are being expressed on farmers cashflows with a reduction in the advance milk payment, and many analysts are now suggesting the new year’s payout will start with a $5.

Taranaki farmers believe they will cope better than most with the lower payout, stating that lower debt and lower costs in the region show that their breakeven is at $4/kg ms.

The ANZ bank CEO believes many farmers are in better shape now than when the last downturn occurred, with lower debt and reduced interest rates helping to ease the burden, but the monthly figures show a different picture.

Overnight the global dairy auction prices fell further (-3.5%), with increased volumes offered and dropping milk futures giving indications of the market direction, as most buyers have plentiful dairy supplies.

The scientists are starting to find solutions to environmental pressures of agriculture, with a study revealing using higher BW cows at a lowering stocking rate and a feed pad, lowers nitrate leaching by about 50%, at only a small drop in profit.

Dairy NZ is now using body condition scores in estimating their breeding values and says this will lift returns by over $100, as a result of maintaining milk yield and saving on feed costs.