Bountiful spring flows hit payout
After three seasons of declining production, a bumper spring has pushed milk flows 5.6 per cent ahead of last season, putting pressure on payout prices.
ASB senior rural economist Nathan Penny said some of the reason for the healthy national production numbers was that last season’s growing conditions were so poor.
‘‘At different times last season, weather was either too wet or too dry. In contrast, this season, the weather and thus growing conditions have been favourable, helping production start strongly.’’
Because farm cashflows were positive, farmers were spending more on fertiliser applications and animal health, which was helping to boost production.
ASB had doubled its 2018-19 season milk production growth forecast from 2 per cent to 4 per cent. Fonterra forecast an increase in its milk collection volumes of 1.3 per cent to 1550 million kilograms of milksolids.
Penny said because extra milk also meant a lower milk price, ASB had trimmed its milk price forecast by 25 cents to $6.25 a kg/ MS, at the bottom of Fonterra’s
$6.25 to $6.50/kg forecast payout range.
The strong start to the season, combined with a decline in global prices for dairy commodities, especially butter, had led Westland Milk Products to lower its predicted payout range for the
2018-19 season to between $6.10 and $6.50 a kg/MS, from $6.50 to
$6.90 previously. Chairman Pete Morrison said indications were that the co-operative would come in about the middle of that range.
Federated Farmers dairy spokesman Chris Lewis said while weather conditions had been good for putting milk in the vat this spring, there was another seven months in the production season to go.
‘‘It always averages out. That’s what experience tells you.’’
Not a lot of silage had been made. ‘‘So if it gets drier there is not a lot of feed reserves out there.’’