Fears for next season's milk price

Dairy farmers' hopes of brighter milk price prospects for the new season copped a bruising with the fairly savage fall in wholemilk powder prices on the latest Global Dairy Trade auction, deepening negative sentiment in the economic cornerstone sector.
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If there was any consolation to the 13.3 per cent wholemilk powder price tumble on the auction, considered a barometer for world dairy prices, it was that sale contracts extend through the lowest end of the New Zealand season, when the country has not got much product to sell, said BNZ economist Doug Steel.
«It isn’t quite as bad as if these prices applied to peak milk flow [time]. But that is of second order because sentiment is certainly negative.»
The wholemilk powder price fell to US$2538 per tonne.
The average price on the auction fell 10.8 per cent on the previous event, with butter milk powder taking a heavy hit, down 25.1 per cent at US$2130, skim milk powder was down nearly 10 per cent at US$2467 and rennet casein declined 8 per cent to US$6980.
Another small consolation, though by no means a certainty, is that with most of the season’s milk produced and sold, there is unlikely to be any big move in the current season’s milk price, forecast by industry price setter Fonterra to be $4.70kg milksolids.
BNZ moved its own current season forecast down from $4.80 to $4.70 with some downside risk, on the back of the latest GDT result, Steel said.
«But it [GDT] does raise concern about the 2015-2016 season. We are still at $6 and current pricing and the currency certainly suggest something well south of that, but it is very, very early days.»
However if GDT prices stay low, Fonterra was unlikely to be aggressive in its opening price forecast expected late next month for the new season which starts on June 1, which would affect the advance rate paid to farmers to help them through the early part of the new season.
«Cashflow is already going to be very tight and this doesn’t help,» Steel said.
Federated Farmers dairy chairman Andrew Hoggard the GDT result wiped out a string of slightly improving GDTprices this year and sent farmers «back to square one».
«We’re back to predicting a $4.25 milk price and it doesn’t provide huge confidence about (predictions for) the milk price next season, which had been in the $6 range. I’m starting to get nervous.»
The latest auction had been expected to deliver a price decline due to several influences weighing on world prices, but the extent of the decline took market observers aback.
Influences included autumn rain lifting world market expectations of New Zealand production, Fonterra began its move to increase its product offer on the auction by nearly 11,000 tonnes over the next three months,  the Euro is very weak which increases competition against New Zealand product,  Chinese demand is subdued and international grain prices remain low.
Also, quotas on European dairy production were completely lifted last week on April 1.
Steel said the effect of the quota lift might not even be clear in five years. The end of quotas had been well-telegraphed for years and had been progressive. Many countries were not operating at quota level anyway so the event would have no impact at all on their production.
«Around Europe the biggest question is not so much how efficient producers like Ireland, Netherlands and Germany will increase production, but how long inefficient producers try to hang on and whether policymakers in those countries react and try to prop them up in some other fashion.»
 
Source: Stuff

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Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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