«Despite having a free trade agreement with China, when things get difficult it’s New Zealand that feels the pain in its supply base,» Hunt said.

Dairy has had an unbelievably consistent track record in sustaining global demand – even now demand is rising. Going forward, that will be led by emerging markets and we believe that they will continue to struggle with that milk requirement.

Rabobank’s head of food and agribusiness research for Australia and New Zealand, Tim Hunt

Hunt said China’s imports were stabilising and starting to rise.
In the US, which is enjoying a strong resurgence in domestic consumption, participants had been pulling back from world markets.
Hunt said the market was going through its third downturn since 2008. «It’s important we all learn what we can from this one,» he said.
«We expect this recovery to start kicking in the next production season,» he said. In terms of lessons learned from the latest downturn, Hunt said it was sometimes «not enough» to be the lowest cost producer.
Looking back at the peak, when milk prices hit a record $8.40, Hunt said not enough New Zealand producers took the opportunity to reduce debt.
«We probably carried too much debt and costs going into this downturn,» he said.
DairyNZ has been on a campaign to advise farmers on how to get costs out of their systems, with a heavy emphasis on returning to a grass-based model.
Dairy NZ chairman and Fonterra director Michael Spaans told farmers that Dairy NZ was «emphathetc and we stand beside you». Farmers had already made big inroads into their costs. «We know what we need to do in executing that plan,» he said. «We are at the bottom and dairy prices will get better.»
Fonterra’s farmgate milk price for the current season sits at $3.90 a kg of milksolids, against Dairy NZ’s estimate of the average breakeven point of $5.25. The co-op will issue the first forecast for 2016/7 near the end of this month. Analysts expect to see a milk price around the mid $4 level.