The Weekly Dairy Report: Weather and market concerns shakes farmer confidence levels

Last week much of the country thawed out and dried up nicely, but the reprieve was short lived with more snow, hail, and rain on the way to make wintering difficult.

North Island pasture growth rates are reasonable for this time of year but some areas are having issues utilising feed because of wet soil conditions, while the east coast of the south island is still very dry and conversations are turning to prospects this spring.

El Nino conditions build, with further intensification predicted and some climate models suggest this weather pattern could continue into 2016 as farmer confidence dropped even lower on the market and weather sentiments.

Further bad news from the market as the auction returns fell for the 8th event in a row, and whole milk powder prices dropped by 10%.

Global over supply, that has seen some US milk dumped into pits, combined with weak demand out of China, has resulted in new seasons bank forecasts being lowered, some now below $5/kg ms.

The dairy futures market reflects the present situation as later premiums have disappeared, although the heavy cow cull is equivalent to about 400 herds, as farmers seek to reduce costs with a lighter stocking rate on higher per head production.

Fonterra has responded with proposed job cuts, as the dairy giant plans to rationalise it’s personnel with more emphasis on the sales team, and after the demand for it’s Gauranteed Minimum Price scheme is looking into put together longer term deals at a fixed price.

Milk processors are also coming under fire for the price of domestic dairy products that haven’t responded to the drop in market prices, like that being paid at the farm gate.