The Weekly Dairy report: Global auction prices fall, as some forget about low cost grass based systems

The Weekly Dairy report: Global auction prices fall, as some forget about low cost grass based systems

A cold south west storm has battered the south bringing rain and an early start to autumn.

However according to the latest NIWA 3 month outlook report there is unlikely to be a quick soil moisture turn around in the dry northern areas.

Drought fears are again being expressed in areas right down to Taihape, and regions that have received moisture now have to cope with rapidly increasing facial eczema spore counts.

A key learning from last years drought that advisers are promoting is “don’t milk too many cows for too long”, to ensure next years production will not be compromised.

The pasture growth forecaster shows rates have slowed to a standstill in most NI areas, and managers are being reminded that cows fed too much supplement will avoid cleaning up grass residuals and harming future quality feed.

The season nationally however continues to break records, with production ahead by between 3-9% on last year and Fonterra increasing it’s predicted payout to $8.75 on the back of strong Chinese demand for it’s powdered products.

However the expected price adjustment will hit soon and todays auction could be the start of an easing off record highs with values back 4% on heavier volumes offered.

Whole milk powder dropped to levels not seen since June 2013 but with much of the seasons product already committed it is unlikely this will have any affect on predicted payout prices.

The costs of production are rising rapidly in this sector with many farmers chasing production with increased supplementary feeds, and large scale dairy farmer Leonie Guiney warns that the low-cost grass based systems should not be discarded.

She says the Irish industry has gone back to this system after profits were reduced in the high cost model and is concerned the NZ industry is following this trend.

To highlight these issues she states her farms herds she is associated with, produce at over 400kg/ms per cow, but the costs of production are 40% below the Canterbury average and well placed to adapt to the volatilities of future price variations.

In these times of boom prices and surplus cash it is a message all dairy farmers should think long and hard about.

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