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The Weekly Dairy Report: Auction result produces a much needed boost as production falls further

Rural News
The Weekly Dairy Report: Auction result produces a much needed boost as production falls further

More rain last week in localized areas of the NI and some in the south, but the central South Island continues to be baked with temperatures in the 30’s.

Some rain relief is predicted for this week, but nobody is suggesting it will be a drought breaker, and many believe the dry could continue for at least another month.

Some farmers in South Canterbury are now on OAD, 16 hour milking, or drying off poorer producing cows, as they make the hard decisions in the face of feed shortages and low prices.

Annual milk production is behind in Southland after a slow spring and dry January, and many areas of the Waikato missed significant recent rains.

Dairy advisers suggest the break even cost for feeding supplements for production is 25c/kg dm and many are unable to purchase feed for this value, and will dry off some animals instead.

The weather is reflecting in milk flows, with Fonterra readjusting predicted volumes 3.3% downwards, after present collection levels are 6% lower than last year.

Some analysts predict this could have a positive effect on price, as the market digests the influence of lower production, and the next few auctions could show future direction.

And at last nights event the short supply,  production estimates and a more attractive currency, have significantly boosted auction powder prices with WMP lifting 19.4% to US$2874, and SMP rose 6.7% to $2598.

AMF and Cheddar did however fall in price, but were compensated by lifts in butter and rennet casein, so overall a very positive result, but analysts still report plentiful global supplies and weak demand out of China.

Synlait, however has a much more pessimistic view of the arrival of an upturn, and predict WMP prices to reach only $2700/tonne by July, and subsequently cut their forecast to $4.40/kgms.

Fonterra is blaming an administrators error in the loss of it’s cheese contract with the US, and also removed significant volumes of product out of the global dairytrade auction, on the back of the lower production forecast.

The theme of feeding as much grass as possible into cows to lower the cost of milk production, is again being highlighted, this time by a NZ sharemilker, in an address to an Irish Dairy forum.

Environmental concerns continue to be a priority in the sector, with a big fine for a recidivist Taranaki farmer for an effluent spill into a stream, and farmers in Southland voice their nervousness about nutrient limit proposals that could make many farms uneconomic in their province.

The evaluation of last winter’s cow deaths in Southland stressed the importance of caution when transitioning cows off grass onto brassicas, and advisers comment these rules also apply with summer brassicas.

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9 Comments

It has been derided as "franken-milk" by some, but Coca-Cola strongly believes shoppers are willing to shell out twice as much for Fairlife whole milk and its three spin-offs - reduced fat, fat-free and chocolate.


Read more: http://www.smh.com.au/business/coke-hopes-to-cream-it-but-consumers-dub-foray-into-dairy-frankenmilk-20150204-135jg6.html#ixzz3QoOMdKwk   The fizzy drink behemoth has made its first foray into the dairy market, releasing a "premiumised" milk it claims has double the protein and half the sugar of the conventional sort.  
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After years of development, Eurolactis has officially launched what it claims is the world's first carton-packed donkey milk. 

http://www.dairyreporter.com/Manufacturers/Eurolactis-launches-world-s-first-carton-packed-donkey-milk

 

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'Inventories still plentiful'

Indeed, the overall volume of dairy product traded on Tuesday was, at 28,000 tonnes, down 20% year on year, and the lowest since June 2013 – in the aftermath of the worst drought in New Zealand in a generation, which dried up pasture and sent milk output sharply lower.

"When you have lower volumes, that is going to make it more likely you will get price moves," said Dave Kurzawski, senior broker at INTL FCStone's Chicago-based dairy operation.

However, he urged caution over betting on a sustained rally in prices, when there was little evidence yet that the dynamics behind last year's halving in GlobalDairyTrade prices – slow Chinese buying and strong milk production in exporting countries – had been reversed.

"It still looks like inventories are plentiful. Milk supply is slowing a bit in Europe, but is still robust in the US," with the northern hemisphere countries taking on more importance now that southern hemisphere output is in seasonal decline.

 

http://www.agrimoney.com/news/milk-powder-prices-jump-taking-2015-gains…

 

 

US milk production, if interested click on the oil rig count.

 

http://www.attenbabler.com/u-s-dairy-products-production-update-feb-15/

 

 

 

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yes but no, but yes, no........... at weeks start.

Synlait cast doubt on ideas of a strong revival in dairy prices, saying that a surge in Chinese milk production, besides high inventories, were behind the modest demand from the key importing country.

...... And Synlait cast doubt on ideas among some commentators of an imminent pick-up in imports by China, flagging not only that "high inventory levels are still being worked through", after huge buy-ins in 2013-14, but that the country's output had picked up sharply too.

"China year-on-year production growth is estimated as 15%," the group said.

http://www.agrimoney.com/news/synlait-urges-caution-on-ideas-of-dairy-price-rebound--7929.html

The group also revealed it had delayed a decision on investment in a butter plant "to keep capital spend down".

Synlait shares closed down 2.1% at NZ$3.33 in Auckland.

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Blue River Dairy has sold its processing plant and brand to a Chinese company in a substantial investment deal with buyer Blueriver Nutrition HK promising to pump more than $40m into the Invercargill factory.

http://www.stuff.co.nz/southland-times/news/65610114/Blue-River-sold-to-Chinese-company

"Bulk sheep milk powder prices have risen more than 50 per cent over the past three years to $13,000 per tonne which highlights international market pressures. Our company adds significant value to the bulk powder, manufacturing finished goods that are recognised for their health benefits by discerning Asian families," the spokesman said

Overseas Investment Commission approval was not required for the sale of the plant to Blueriver Nutrition HK.

 

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Last year, New Zealand-listed a2, 17 per cent-owned by Freedom, struck a deal with ­Chinese online retailer Jingdong to offer fresh Australian milk to the 500,000 registered users of the site.

http://www.theaustralian.com.au/business/in-depth/perich-family-in-50-year-deal-to-milk-chinese-kids-market/story-fni2wt8c-1227202846813

 

Guangzhou-based Shenzhen ­JiaLiLe Food Company. THE group behind one of the ­top selling ready-to-drink beverages in China plans to invest $US100 million ($128.4m) on marketing and distributing Australian food products to Chinese children as part of a landmark ­alliance with the billionaire ­Perich family’s Freedom Foods Group.

As the first step in a 50-year agreement between Freedom and the Guangzhou-based Shenzhen ­JiaLiLe Food Company, the partners will this weekend launch Australia’s Own Kid’s Milk as one of the first Australian milk products aimed specifically at the toddler market in China.

Over the next five years Shenzhen JLL — also the biggest producer of herbal teas in China — is expected to spend more than $US100m on brand marketing and the distribution of Freedom’s dairy products and potentially ­cereal and snack products to children.

 

http://thea2milkcompany.com/wp-content/uploads/2014/08/2014-full-year-results-presentation.pdf

 

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supply just got bigger - see video within

http://www.nizo.com/campaign/101

 

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