The Weekly Dairy Report: Auction prices reach all time lows as Fonterra shareholders brace for big downward adjustment

NIWA reports soil moisture levels are at field capacity in most regions of New Zealand except the east coast of both islands, and August has started with cooler than normal temperatures and a polar blast still to come.

With good planning and excellent utilisation of winter brassica crops and saved grass most cows seem to have wintered well, and have reached their pre-calving condition score targets comfortably.

Calving is now well through in many North Island areas but just starting in the south, and managers will need all their grass management skills to produce low cost milk.

Planning for next years winter grazing starts soon for dairy support managers and good communication is needed to ensure the availability of suitably priced quality feed, as many are resticted by nutrient levels to allow any changes from off farm wintering.

Another poor global dairytrade auction that saw prices drop for the 10th event in a row and reach levels unseen in the platforms history, and few farmers would be profitable at these levels.

Fonterra announces it’s updated 2015/16 prediction on Friday and many are predicting the forecast will start with a $3 and graphically reinforce the poor market situation caused by a global jump in production of 850,000 extra tonnes of milk in the first 5 months of 2015.

Westland has downgraded thisĀ ($4.80-$4.90) and next years forecast ($4.60-$5.00), as the Europeans are still producing record volumes of milk, and at this stage nobody is predicting just where and when the bottom may be reached.

Dairy giant Danone has reported the upturn will rebound in 2016, and the trade deal with the Trans Pacific Partnership has stalled with NZ negotiators reporting difficulty getting a satisfactory deal for dairy.

Lots of unsold feed barley has been revealed in a survey of stocks, as DairyNZ calls for cuts in unprofitable production suggesting supplementary feeding to milking cows should be minimal at present income levels.

Farmers have historically been proven to be resilient in times of market and climatic stress, and managers can only carry on with every cost “trimmed to the bone” and trust that past investments in infrastructure will surfice in this difficult year.

Sharemilkers have been urged to discuss the financial situation with their owners as they readdress their budgets, as Ballance Agri-Nutrients fast tracks their fertiliser rebate payments to help cash strapped shareholders.