The country’s second-biggest dairy processor, Open Country, says its new season milk price guidance remains unchanged but the outlook is for downward pressure, not an improvement. By Andrea Fox.
Chairman Laurie Margrain said the company had just finished a round of meetings with its farmer-suppliers and told them its forecast remained the same as when it was struck five months ago at $4.25-$4.45.
Margrain said it was still too early in the new season with too little milk volume to be able to elaborate, but “if there is any pressure, regrettably, it’s downwards”.
Any such pressure would come from the strong New Zealand dollar and the continuing imbalance between high international milk production and weak demand.
There was little evidence international milk production was falling, he said.
Open Country was closely watching the impact of exchange rates and international market production but “regrettably there is no reason to be optimistic”, he said.
Industry leader Fonterra is expected to announce an update on its 2016-2017 season opening forecast of $4.25 in early August. The average price at recent Global Dairy Trade auctions, considered a barometer of international demand, have been flat.
Latest available figures from the European Commission show European production of whole milk powder, a product which has a major influence on New Zealand farmgate returns, increased nearly 13 per cent between January and April. compared to production in the same period last year.
European skim milk powder production lifted 18.2 per cent and butter 12.3 per cent. Raw milk production by European farmers was up 5.6 per cent.
United States milk production in June was up 1.6 per cent on June last year, according to the US Department of Agriculture.
Production per cow in the 23 major states was the highest for the month of June since the 23 state recording series began 13 years ago.
At 8.65 million head, there were 17,000 more dairy cows in the 23 states in June than in the previous June, and 3000 more than in May this year.