National Banks December rural report

This report highlights the uncertainty and unpredictability of economic indicators at present. The underlying markets for most NZ pastoral products appear firm but the challenge is to turn this position into steady profitable farm gate reurns. They say a NZD forecast based on "fundamentals", indicates an easing to fair vaue over the next three years but market conditions often think otherwise. They also predict that the OCR will remain unchanged until the second half of 2010 but then take 50 bases point increases to reach 5.5percent by September 2011 They also say there has been a reversal in the outlook between sheep and dairy farms in favour of dairy. The latest milk price forecast puts dairy businesses back in the balck but the increasing exchange rate has seen sheep and beef farms return to small and medium deficits. The product reviews are at 0.70c US exchange rate and forecast crossbred wool at $1.80-2.40/kg, lamb at $70/hd and mutton at $35. Not at all inspiring for sheep farmers. The beef values are $3.00/kg for steer and $2.80 for bull beef.  Deer values are at $6.50 for venison and $70-80 for velvet ( which looks too low on how the pools have started). For detail look here in http://www.nationalbank.co.nz/rural/information/ruralreport/pdf/200912.pdf