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The Weekly Dairy Report: El Nino appears a fizzer as dairy prices get worse at auction

Rural News
The Weekly Dairy Report: El Nino appears a fizzer as dairy prices get worse at auction

DAIRY

The transformation continues for dryland country in Canterbury, as the region received between 50-100mm of rain last month, and less hot windy days to ensure every drop was well utilized by pastures.

Many pasture growth rates on irrigated pastures are ahead of demand and the surplus is being conserved into silage or baleage.

The rest of the country has had a better summer than predicted and weather forecasts of a severe droughty El Nino have not come to pass, resulting in more milk produced,  with one bank's dairy analyst predicting a 3% drop in milk flow, up from the past figure of -6%.

Mating is now finished and saleyards have been full of service bulls and another influx of later dry cows as managers look for cash to relieve their very tight budgets.

Spore counts have risen with the warm moist weather in the upper North Island and water troughs are being treated with zinc as the at risk period starts.

And this week things got even tougher, as Fonterra followed both Westland,  Open Country Cheese and Synlait, in adjusting the forecast downwards to $4.15/kg ms for the year.

As suggested by the milk futures trade, last night's auction result confirmed this pessimistic forecast with a significant price drop of 7.4%, with all main products falling in price and was lead by the key product whole milk powder, which suffered a 10.4% fall to below US$2000/tonne.

Too much global supply of milk is at the core of these unsustainable price issues and while many countries have reduced production, the Europeans stung by the embargo of exports to Russia, have been slow to adjust.

Prices they are receiving are well below the cost of production so they will eventually capitulate, but the trend is the recovery will be slow and farmers may have to wait for another 18months before surplus cash returns to their accounts.

Some evidence is being seen that the banks patience is wearing thin, with a large recently developed dairy enterprise near Taupo in the hands of the receivers, and with last nights auction pricing more are sure to follow.

But in contrast, five neighbouring dairy farms in Southland have been sold for $41 million to a US and NZ owned partnership, and gained OIS approval to further develop these properties.

Reports suggest a swing to wintering pads and barns in Southland as managers endeavour to reduce the cost of wintering off, and meet the tough environmental standards relating to nutrients leaching out of soils under wet conditions.

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9 Comments

CHINA: dairy products Import year-to-date (December 2015)

__________________QUANTITY (Tons)______________VALUE (’000 USD)

__________________2014______2015______± on 2014__2014________2015________± on 2014

Infant milk formula.....123.116........179.941........+46,2%.......1.565.809........2.518.075........+60,8%
WMP..........................670.857........347.048........-48,3%........3.311.659...........989.708........-70,1%
Whey Powder............404.433.......435.754........+7,7%.............788.402...........525.442........-33,4%
SMP...........................252.840.......200.268........-20,8%.........1.125.196...........517.207........-54,0%
Cheese........................65.973 .........75.581........+14,6%...........342.428...........347.963........+1,6%
Bulk and pack. milk ...286.880.......401.894........+40,1%...........301.790...........333.119.......+10,4%
Butter...........................80.405..........71.259........-11,4%............378.011..........265.483........-29,8%
Other products*.........106.432.......117.417........+10,3%............293.829..........246.460.......-16,1%

TOTAL IMPORT.....1.990.936.....1.829.162.........-8,1%.........8.107.124........5.743.458.......-29,2%

* Other products: Caseinates, Lactose Pharmaceutical, Condensed Milk, Lactose edible
Data processed by Clal based on GTIS source.

China imports in December 2015 compared to December 2014 increased in volumes for

  • Butter (+150.3%),
  • Bulk and pack. milk (+125.2%),
  • Infant milk formula (+111.4%),
  • Cheese (+43.4%),
  • Whey Powder (+22.0%),
  • SMP (+5.0%)
  • while decreased for

  • WMP (-21.3%).
  • The main Exporters of Bulk and pack. milk in 2015 were:

  • Germany export, accounting for 49% of market share, increased by 59.9%
  • Australia export, accounting for 15% of market share, increased by 44.8%
  • New Zealand export, accounting for 13% of market share, increased by 65.1%
  • France export, accounting for 4% of market share, decreased by 40.7%
  • Italy export, accounting for 3% of market share, increased by 162.9%
  • http://news.clal.it/en/china-imports-european-uht-milk-increase/

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    this will get those buyers back week after next.

    Before the ink was barely dry at today's signing ceremony, US President Barack Obama played his 'China hand' saying TPP would give the United States an advantage over other leading economies - namely China.

    "TPP allows America - and not countries like China - to write the rules of the road in the 21st century, which is especially important in a region as dynamic as the Asia-Pacific," Obama said.
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=115…

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    Sofia. “10 days ago Bulgaria received official approval from China for import of milk and milk products from Bulgaria”, said Bulgarian Deputy Minister of Agriculture and Food Vasil Grudev, speaking at a special press conference on the results from his meeting with the agriculture ministers of Estonia and Hungary in the frames of Bulgaria’s participation in the International Green Week Berlin exhibition, FOCUS News Agency announced.
    “We managed to complete a bothersome and cumbersome procedure. The truth is that every agricultural product that enters China must be certified with a respective protocol and permission by the General Administration of Quarantine in the country. Thanks to the political efforts of the Bulgarian Government in this direction, we have specific results. The procedure is finalised and we can freely trade with China,” the Deputy Minister said. According to him, the concept of Bulgaria for the development of the agricultural sector must be complex.

    http://www.focus-fen.net/news/2016/01/16/395330/we-received-official-ap…

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    Ecan: Changes to the Hinds Plan are here and now

    http://ecan.govt.nz/news-and-notices/news/pages/decisions-on-hinds-wate…

    The Plan Change sets limits, targets, timeframes and additional policies and rules on water quantity and quality in the Hinds/Hekeao Plains area. A schedule lists farm management practices relating to nutrient management, winter grazing of intensively farmed stock, cultivation and collected animal effluent.

    Key features of the Plan Change

    Restrictions on further land use intensification until nitrate levels are at or below an average annual groundwater concentration of 6.9 milligrams per litre (the national bottom line).
    Properties will still be able to develop under the Rangitata Diversion Race Management Ltd discharge permit until it expires in 2019.
    Rules will affect the future growth of the Barrhill-Chertsey irrigation scheme in this area.
    Good management practice is required of all farming activities – see www.ecan.govt.nz/mgm-gmp for details.
    Land users are permitted to increase nitrogen losses up to 15 kilograms per hectare per year without requiring consent.
    Properties exceeding 20 kilograms of nitrogen per hectare per year will be required to progressively reduce their discharge beyond Good Management Practice levels by:

    15% by 2025

    25% by 2030

    36% by 2035
    - but will not be required to reduce nitrogen losses below 20 kilograms per hectare per year.

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    I hear on the grapevine that there are now some serious water quality issues. Wouldn't drink the water myself.
    This is a big issue and I don't think this goes anywhere near fixing the problem. The irrigation is causing a lot of the damage.

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    Scheming? See page 2 onward - cost of opex/capex.

    https://www.anz.co.nz/resources/2/b/2b7af074-59dc-4a4f-be18-13177d165f7…

    not all smiles now :(

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    Yes indeed - it's a bit more than 'JUST ADD WATER' - I suppose it seemed simple at the time for the greater fool cohort - mind you the civil engineering fraternity have cleaned up.

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    Mycobacterium avium subspecies paratuberculosis (MAP) is the suspected cause of Crohn's disease. MAP causes a disease in dairy cows and other animals that is similar to Crohn's disease, called Johne's ('Yo-knees') disease or paratuberculosis. Dairy cows with Johne's disease secrete MAP into their milk and excrete MAP into their feces. MAP is present in untreated water such as well water, in bodies of water contaminated by agricultural runoff, and in unpasteurized milk and cheese.

    The "treatment" of "tap" water to make it "drinkable" or "potable" by the processes of sedimentation, filtration and chlorination has little to no effect on MAP. MAP is so resistant to chlorine disinfection that such disinfection actually selects for its growth. Other subspecies of Mycobacterium avium grow in biofilms present on tap water pipes. Despite the documented presence of MAP in tap water and its probable growth on tap water pipes, clusters of Crohn's disease have not previously been described in relationship to tap water pipes supplying patients' homes.
    http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2757027/

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