Sup­ply short­age ex­pected to lift dairy pay­out

South Waikato News - - FARMING -

Econ­o­mists are tip­ping a lift in dairy pay­out af­ter a 10.4 per cent surge in the av­er­age price on Fon­terra’s lat­est Global Dairy Trade auc­tion, as pro­duc­thun­gry in­ter­na­tional buy­ers re­acted to a shrink­ing world dairy sup­ply.

The BNZ and West­pac predic- ted Fon­terra’s pay­out forecast for the 2012-2013 sea­son would get a nudge up from the auc­tion re­sult, which saw the av­er­age price of wholemilk pow­der break through the US$4000 (NZ$4800) bar­rier for the first time since March 2011.

BNZ econ­o­mist Doug Steel said the big jump in av­er­age price re­cently was driven by drought in New Zealand, shrink­ing milk pro­duc­tion in Aus­tralia and ro­bust world de­mand for protein. Prod­uct vol­umes of­fered were 14 per cent down on pre­dic­tions. A record num­ber of overnight bid­ders went away unsat- is­fied, Mr Steel said.

He ex­pected GDT prices to warm a littler as th­ese con­di­tions con­tin­ued, and pay­out prospects to fol­low, but cau­tioned against too much op­ti­mism be­cause rain would even­tu­ally ar­rive in the North Is­land and the north­ern hemi- sphere dairy sea­son would get un­der way in a a few months.

BNZ mar­ket strate­gist Mike Jones said 10.4 per cent price in­crease was a ’’stun­ning re­sult, much bet­ter than ex­pected and as a re­sult the NZ dol­lar has ap­pre­ci­ated, but it hasn’t been a mas­sive in­crease’’.

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