The Weekly Dairy Report: Low volumes lift auction prices as WMP is near the $3500/tonne target

The intensity of the drought just got longer last week and moved to areas of the North Island, even though cooler temperatures prevailed and some misty rain arrived.

A drought declaration in the South Island confirmed the seriousness of the situation, and bought in feed increased in demand and price.

Reports suggest younger farmers are struggling to cope with the intensity of the dry in the south, after the last 10 years have been relatively moist, but older managers still recall past droughts, and are using their experience to deal with the situation.

Milk production volumes are falling with the feed shortages, and the South Island’s contribution is now 5% lower than January last year.

Pregnancy and herd testing of cows gives farmers opportunities to cull inefficient animals, and decrease the pressure on feed supply, but a processing backlog is causing delays.

The Fonterra chairman again reminded farmers, that if the $4.70/kgms prediction is to be achieved, it requires WMP prices to lift quickly to rates in the $3,500/tonne region.

And the latest auction moved a long way toward this with a stunning rise for all dairy commodities, and whole milk powder selling for $3272/tonne in a reduced volume event.

MyMilk reports good progress in the central South Island in attracting new suppliers, especially as Synlait’s present milk forecast, is lower.

The Southern Dairy Hub proposal is stalling for funds with the dairy downturn, as organizers strive to build a research and extension facility that promotes the sector in that region.

LIC has reported a better financial year than expected, with strong interest in animals with short gestation genes, DNA parentage testing, and automation technology helping keep their results respectable.

News that Fonterra are bidding to take a 20% interest in a Chinese infant formula processing company shows where the growth aspirations lie, but the challenges remain in this market, with reports of a high number of rejections and returns of product, blamed on tardy paperwork, not poor quality product.