The Weekly Report: A glimmer of hope with milk auction result as whole milk powder lifts 5.5%

Another week without rain and coupled with very hot conditions the regions dryland crops and pasture are suffering.

March weather conditions will be pivotal for the seasons pasture production to enable the milk flows to be maximized and to grow adequate feed for wintering.

More dairy livestock are being sold down as managers look for cashflow, and realign to a low cost pasture dominant system.

Nothing to inspire from the milk market last week, as very low volumes in the dairy futures trade and more pessimistic talk about the growing dairy debt, have only added to the gloomy forecasts.

An Auckland law firm has highlighted the increasing numbers of dairy clients unable to handle this debt, and with a growing number of analysts, are questioning any medium term optimism with the markets.

At last a glimmer of hope at last nights global dairy trade auction as overall prices lifted by 1.4% but more importantly was the rise in whole milk powder prices by 5.5% to $1974/tonne.

Nobody is suggesting the dairy price crisis is over as supply is still ahead of demand, but China is expected to purchase more this year than last as global prices are lower than what it costs them to produce domestically, but dairy farmers need hope for the future and this is a start.

Only four more auctions before Fonterra is planning to announce next years forecast result and most industry commentators believe it will start with a $4 and indicate more tough years ahead.

Fonterra has launched a $150 million bond issue to fund normal business costs, and opens three new plants at Edendale that will allow it to produce 8 different products from this large southern plant.

The CEO of Westland Milk Products announced his resignation last week, disappointing many of their suppliers as they look for experienced leadership to help them navigate through these tough times.