Dairy farmers hope milk prices rising 3 per cent at the GlobalDairyTrade (GDT) auction heralds a period of stability. By JILL GALLOWAY.
Federated farmers Manawatu/Rangitikei president James Stewart said farmers had sustained a tough couple of years, and were pleased to see the increase.
“It’s a bit of good news. Dairy farmers are not getting too carried away, however, they are pleased.”
He said after all the volatility and negativity it was good to see prices recover.
Stewart said the gain showed the improved international dairy market was not just a flash in the pan but a recovery.
“It is not a false recovery, which farmers were worried about. It is good to feel a bit comfortable after some of the toughest times we have experienced.”
ASB analyst Nathan Penny said there had been a “hint” of a 5 per cent fall on the futures market before the auction.
The price for New Zealand’s main export, whole milk powder (WMP), lifted 2.9 per cent to US$2855 per metric tonne, following a drop of more than 12 per cent at the previous auction on March 7.
Penny expected the latest result to cement the Fonterra $6 per kilogram of milksolids farmgate forecast.
Stewart said dairy farmers had grass and cows were in good condition, after a wet summer.
Farmers were, however, feeling the pinch of the recent cyclones and the heavy rain they brought to the Manawatu/Rangitikei regions, he said.
“I know we are not as bad as some hard hit flood regions, but the wet has been a bit of a dampener here. For many dairy farmers it has knocked the gloss off.”
He said there had been a drop in milk production from the wet conditions.
“We’d all like to see a bit of sunshine before winter sets in. And talking of the winter ahead, we hope it is going to be mild.
Stewart said the good news was that farmers had not had to dole out supplementary feed, such as silage, because there was so much grass.
“This time last year, we had fed out half our grass silage. This year we have not had to feed out any. We have it all on hand and it bodes well for the winter and spring ahead. Having extra supplementary feed gives you confidence.”
Meanwhile, New Zealand First said the experts got the global milk price wrong and it questioned the point of GDT.
“After Fonterra turned Eeyore over the impact of the floods on milk production, the so-called experts were beating their chest about a big, up to 6 per cent lift in whole milk powder prices, but were wrong yet again,” said New Zealand First Leader and Northland MP Winston Peters.
“That’s the problem with GlobalDairyTrade. It has become a huge fortnightly distraction where farmer morale ebbs and flows like water.
“Since Fonterra only sells a fraction of product through GDT, NZ First asks if GDT is a dangerously redundant tail wagging the industry’s dog. Straight whole milk powder averages on GDT tell us this season is only marginally ahead of 2014/15’s $4.40 payout.”
Peters said with this season’s payout holding or expected to exceed $6/kg before dividends, GDT was no longer even a reliable ‘price discovery’ guide.
“And the flooded farmers of Bay and Plenty and Waikato, whose winter feed has been destroyed will basically say ‘whatever.’ It is all academic if you cannot milk.”