The Weekly Dairy Report: Some analysts predict a slow price recovery as no signs yet of reduced global milk supply

Spring pasture growth rates are building, and in some North Island areas growing early grass ahead of the norm, but western regions in both islands are wet and southern provinces slow with the cold temperatures.

Climate observers are reminding managers that conditions for an El Nino are imminent, and east coast regions and Northland look vulnerable going into the summer with below average soil moisture levels.

Winter brassicas are now nearly all finished and the animal health issues from last years feeding problems have been absent, after colder conditions and less herbicide tolerant varieties were sown.

New Zealand’s milk production figures for July were well ahead of last year in a global market looking for less supply, but flows should ease in the months ahead as the big cow cull, lower supplementary feeding levels, and possible drought conditions takes affect.

Palm kernel prices have dropped below $200/ tonne, and cereal feed values are also reducing weekly as the focus returns to grass, and DairyNZ spread the best pasture management advice.

Oceania prices lifted on the back of the second positive auction and milk futures point to further lifts, but the short term pain is already being felt by the dairy support sector, and there has been a strong early uptake of Fonterra’s interest free loan scheme.

Some commentators suggest the milk price recovery will be slower than first hoped, as big stocks of milk powders held by China need to be consumed in an economy which is going off the boil, and the EU and US summer milk flows are ahead of last year.

Another suggests, that retailers will be slow  passing on  the lower prices to the consumers, as they look to recover the losses felt when prices were at record highs.

Dairy farmers report they have been happy with the banks attitude and help in the downturn, as the sector hunkers down to weather the storm and aim to minimize the losses and be ready when prices improve again.

Dairy farm real estate offerings have fallen to low levels, as the downturn has made it a poor time to sell, but as yet few forced sales have been advertised and prices have held at a reasonable level.