The Weekly Dairy Report: Some signs bankers are starting to move on heavily indebted as turn around will take longer than thought

The Weekly Dairy Report: Some signs bankers are starting to move on heavily indebted as turn around will take longer than thought

A dry week nationally with some areas again beginning to frizzle up after the recent hot temperatures and NIWA reminding weather watchers they anticipate El Nino conditions will hang around for a month or two yet.

In Canterbury the Opuha dams irrigation restrictions have been lifted as the lake has filled enough to give hope the autumn watering period will be unbroken, and January rains have seen a spectacular turnaround for dryland feed conditions.

 ECan has announced changes to the Hinds/Hekeao plains environment plan in Ashburton with restrictions on further land intensification to try and reduce the high levels of nitrates in the groundwater, but as there was plenty of farmer involvement in devising these changes good support is expected.

Spore counts have lifted in the upper North Island with all the moist weather and zinc supplementaion is being increased to prevent facial excema affecting livestock grazing at risk pastures.

The Oceania dairy prices were stable after the poor auction result that saw prices fall by 7.4%, lead by whole milk powders which dropped by over 10% and shattered any hopes of an early recovery this year.

Production figures in Europe continue to increase in a global market awash with milk, and reflects inefficencies of their subsidised systems, and now the French are asking the EU to pay them to reduce milk flows.

Unfortunately more falls are being seen on the futures platform for whole milk powder trades, and farmers will be hoping that results in next weeks auction may at least make a bottom to this unsustainable milk price market.

Once again farmers will have to try and trim their budgets even harder to survive, and the present problems are sure to affect all dairy graziers as well.

The recent reduction by both fertiliser Co-Ops on the price of Urea and DAP will be a welcome help in reducing costs, but  talk of an uncompromising stance by one bank to Southern indebted dairy farmers, and an increasing number of recievership sales notices in real estate pages, makes all in the sector nervous.

The latest Federated Farmers  survey revealed low levels of confidence driven mainly by poor commodity prices and difficult climatic conditions.

In Southland there has been an upsurge in feed pads and barns as managers look to overwinter at home, and keep animals off wet soils to ensure environmental standards are being met.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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6 Comments

I hear that Fonterra has moth balled the new Pahiatua milk drier plant as they cannot sell the WMP.

http://www.stuff.co.nz/business/farming/dairy/71862458/Fonterras-230-mil...

That would make sense as a decent amount of their production was destined for Venezuela and with oil at $30/barrel they can forget about that.

They spent nearly 300 mill on that plant and it got commissioned in August 2015!

These guys are all smiles

Carbon Conscious Ltd (ASX:CCF) is pleased to provide a Corporate Presentation regarding its expansion into the Western Australia Dairy industry

http://www.asx.com.au/asxpdf/20160119/pdf/434g1c32r7vynj.pdf

Carbon Conscious is entering the dairy farming business to supply fluid milk to Western Australia-based Green Lake. Green Lake operates a retail/distribution network in China and is planning to open 300 Capel Farm grocery stores in China specializing in Australian foods and beverages. It currently sells Australian fresh fluid milk manufactured under contract by Australia’s Brownes Foods under theBrownes label (and air-shipped to China), but is looking to expand its supplier network to meet rising Chinese demand.

To better reflect its broadening agricultural interests, Carbon Conscious changed its name to Alterra. The company will initially sell its milk to Brownes but eventually plans to process milk itself under its own label. Australian fresh milk sells in China at A$8-$10/liter

isn't it funny how the way a company perceives itself affects the price it can command and the effort it will go to to market its products and try to defend its failures. Take Tatua vs Fonterra. Tatua say they are a Food company and have a range of specialty end products to customers and delivering there shareholder farmers a respectful return. Fonterra say they are a Ingredients and commodities supplier, although they do have a range of end products. The mentality of their sellers and marketers is bulk movement and not to return high value through maybe smaller sale volumes and multiple sites of supply.
I also think this of our meat processors all seem to have the commodity disease and cannot see past it.
Point in case a friend of mine, consigned a export of meat to an Asian country the supplying manufacturer was not interested in entering the Asian market but is all registered to process and export. Anyway this consignment was a market test all sold out at higher mark-ups of the normal NZ meat suppliers and the demand is set to flow and the customer is wrapped with the product because he knew what the customer wanted and found that the product fitted into that category, mostly but the rest lies with MPI. Don't get me started there.

the way a company perceives itself

https://www.nzx.com/files/attachments/229767.pdf

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