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ASB Farmshed Economics Report
ASB Farmshed Economics Report
17 April 2015
Up,
down and sideways
Drought’s hit on dairy production
not as bad as first feared
Beef prices on the up and lamb
prices may not be far behind
NZD strength a headwind for
farmers
April is shaping up as a mixed bag, according
to the latest ASB Farmshed Economics Report, with dairy, in
particular, experiencing ups and downs recently.
“The recent drought just hasn’t packed the punch on dairy production we were expecting,” says ASB’s Rural Economist Nathan Penny. “We now actually expect nationwide dairy production to be up one percent compared to last season. That said, this extra milk sees dairy prices heading back down towards last season’s lows.”
“The recent price falls are probably too late in the season to impact our $4.60/kg milk price forecast, however next season could possibly bear the brunt of this, so we are watching our 2015/16 season forecast of $6.20/kg closely.”
Lamb prices look like they are on the turn after prices fell over 20 percent between November last year and March. “Tightening local supply will most likely lead to improving prices along with a possible pick up in Chinese demand later in the year.”
Strength is also returning to beef prices with a 5 percent lift over the last month, driven by firm demand from both the US and Chinese markets.
Also, the NZD has hit fresh highs against both the Euro and AUD this month.
“While the looming NZD/AUD parity is great for consumers, it’s not as great for farmers. The strong NZD makes NZ exporters less competitive compared to their Australian counterparts.”
ENDS
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