Sea­son ends up­beat

Hauraki Herald - - SPORT - GER­ARD HUTCHING

The dairy sea­son has ended on a high, with prices at the lat­est Global Dairy Trade (GDT) auc­tion lift­ing 1.9 per cent over­all to reach US$3637.

This con­trasted with the auc­tion two weeks ago when prices dipped 1.1 per cent. The key whole milk pow­der (WMP) in­dex slightly un­der­per­formed ex­pec­ta­tions, up just 0.2 per cent to US$3226. Re­cent falls in the value of the New Zealand dol­lar will be pos­i­tive for dairy farm­ers.

Econ­o­mist Cameron Ba­grie told dairy farm­ers at a fo­rum in Waikato re­cently that he pre­dicted the New Zealand dol­lar could fall to 65 cents to the US dol­lar.

‘‘The one we could po­ten­tially see here that could put the dairy sec­tor in a cash­flow sweet spot is move­ment in the New Zealand dol­lar.’’

Ba­grie said US in­ter­est rates were head­ing higher than New Zealand, which nor­mally saw the New Zealand dol­lar sit down around 60c, he said.

‘‘I don’t think the dol­lar is go­ing to 60c, but I can eas­ily fathom a case where the New Zealand dol­lar goes to 65c. If we can see com­mod­ity prices hold or just be a little bit weaker and we get that 10 per cent kick from the NZ dol­lar...the cash flow re­turns are go­ing to look pretty good.’’

‘‘I think the New Zealand dol­lar is still go­ing to weaken - my per­sonal view is 65c in 12 months. That can pro­vide a lot of cream into the dairy sec­tor cash­flow wise if you can get com­mod­ity prices to hold up,’’ Ba­grie said.

Fed­er­ated Farm­ers dairy chair­man Chris Lewis said the lat­est prices should sup­port far­m­gate prices. Open Coun­try Dairy re­cently an­nounced an open­ing fore­cast for the 2018-19 sea­son of $6.35-65.

He pre­dicted Fon­terra, which is due to an­nounce a fore­cast price later this month, of go­ing slightly higher than OCD.

‘‘But we don’t want dairy com­pa­nies to over prom­ise and raise ex­pec­ta­tions. It’s easy to go high, but much harder to bring it down.’’

‘‘While we know it’s only a fore­cast, some peo­ple take it as gospel.’’

Lewis said he had at­tended a dairy awards event re­cently where the mood had been sub­dued.

‘‘There’s not a lot of con­fi­dence in dairy farm­ing, peo­ple are not ex­pand­ing their busi­ness at the mo­ment.’’

In other re­sults, the an­hy­drous milk fat in­dex rose 5.8 per cent, skim milk pow­der (SMP) was stronger than ex­pected with a lift of 3 per cent, and but­ter was up 2.4 per cent.

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