The Weekly Dairy Report: TPP disapoints for dairy but four positive auctions in a row sees whole milk powder on the way to $3000/tonne

Fierce winds introduced October and again exposed minimal soil moisture reserves, with North Otago reporting conditions as the driest for ten years and temperatures unable to ignite the spring pasture flush.

On the lighter soils irrigators have started watering in what could be a long season in a still predicted dry east El Nino year and although the Opuha dam is all but full, dam managers have a 50% restriction imposed ahead of time to ensure stored water will be avaliable later in the season.

Many dairy farms in the south are still supplementing pasture with some silage to maximize production, even at the reduced stocking rates as a result of the heavy cull, as managers focus on preparing for mating with tail painting.

While in the North Island most farms are growing surplus pasture and will be soon conserving supplements to fill gaps of any future summer shortages, and advisers suggest heat detection is important in mating management and dedication and skills in this area only take time and care, not borrowed money.

The market has responded to the heavy cull and dry seasonal forecast that could see production fall by as much as 10%, by moving milk future contracts well ahead of past auction levels and analysts predict more prices rises should occur at this months events.

And overnight the auction rose for the 4th consecutive time with the event average prices rising by 9.9%, and most importantly whole milk powder prices closed in on the $3000/tonne benchmark that commentator’s use as a breakeven parameter for the predicted payout.

By years end, the challenge may not be the international dairy prices, but farm production levels that need to be enough to cover the debt and high costs structures many farms are operating under.

Last week Westland announced a $4.95 payout for last year and improved the predicted payout to $4.90-$5.30, now closing in on the $5.50 level necessary to pay all the bills without further borrowing.

Farmers are grumpy with Fonterra’s unexpected pke restriction announcement especially in such a tough year financially, and are also cynical at the CEO wage freeze offer in the face of increased staff being made redundant.

Dairy access has proved to be the sticking point for New Zealand trade negotiators, and real concerns are being expressed on the plight of Fillipino dairy workers caught up in the immigration document scam, and who will do the work if they are sent home.

But again overnight a deal has been agreed by the partners of the TPP and while Fonterra has expressed disapointment more advantages have not been able to be achieved for the dairy sector, some progress has been made and the trade deals are an improvement on the past.

The Taranaki District Council have announced their intention to sell their extensive dairy investments in Tasmania as they look to cash up their profits from a different investment for a regulatory body.