The Weekly Dairy Report: Milk prices ease and profit expectations adjusted

The drought is getting more widespread in the north as dairy farmers are urged not to gamble on next year’s production by milking too long.

Feed and time are needed to reach pre calving body condition scores and it is easier to do so when the cow has been dried off, and the cost of missing targets is losses in reproduction and reduced future milk flows.

Reports suggest supplies of PKE are getting tight with delays in delivery and managers are turning to more expensive high energy alternatives.

Advisers are urging good communication with graziers of young stock to prevent unexpected surprises eventuating from the current drought conditions.

With another 5% easing of milk commodity prices at the latest auction, accumulating to nearly 10% from the last 3 sales from the platform, analysts are all predicting the peak has passed and next years payout will be down $1-$2 /kg ms.

Double the amount of product was sold at this event compared to volumes of last year and Whole Milk Powder, the major product offered, dropped to a yearly low.

Fonterra announced it's interim result which revealed a 53% drop in profit caused by a lack of capacity to process more of it's product to powders.

While volumes of milk collected reached an all time high and payout is being maintained at record levels, the 25% not processed into the lucrative powder market dragged the interim profit down.

Synlait also announced  a profit level back on expectations, as new Chinese regulations for infant formula dampened demand and foreign exchange transactions bit into previous estimates.

Rabobank warns that the dairy rally is waning on the back of easing demand from China, and the Prime Minister while visiting that country urges processors to focus on growing added value dairy products.

An updated code of welfare is to include a section on calf euthanasia as the poor publicity from the Chilean fiasco exposed some weakness in the rules in our country.