CHINESE demand for New Zealand dairy products has well and truly “kickedâ€, however there is not enough Kiwi supply to satisfy «the dragon’s» increasing consumption needs, providing opportunities for Australian dairy exports, according to a Rabobank dairy expert touring regional Victoria this week.
Visiting from Christchurch, Rabobank director of Dairy Research New Zealand and Asia, Hayley Moynihan is presenting to local farmers on the Sino-NZ dairy trade relationship, highlighting where the Australian industry can gain increased international market share.
Ms Moynihan is speaking in Colac, Warrnambool, Traralgon, Echuca and Shepparton.
Ms Moynihan said Chinese demand for dairy products had sharply increased with prices skyrocketing by more than 50 per cent over the past two months.
“This price spike has been driven in large part by the New Zealand drought limiting production potential for export, however this event shows how tight global markets are right now,†she said.
“When there is no buffer for a supply shock, markets respond with high prices. This is a ‘here and now’ story.â€
Although dairy commodity prices have eased slightly since the peak in the recent spike, Ms Moynihan expects the market will remain at elevated levels until more product is delivered around spring this year.
Ms Moynihan said while the currency is strong in both Australia and New Zealand, partially eroding returns on dairy commodities exported, market forces have prevailed.
Regarding the free trade agreement (FTA) between New Zealand and China, Ms Moynihan said while the arrangement allows a specified volume of New Zealand product into China tariff-free, tariffs still apply on exports above this level.
“In reality, the FTA isn’t dictating overall competiveness for New Zealand, as the tariff-free volumes only represent around one fifth of the volume that China is importing – Australia is in a great position to make up some of that extra supply, even without a tariff-free provision,†she says.
Source: Stock Journal
