COMMENTARY

GDT #192

The GDT auctions this calendar year have (relative to the experience of prior years) shown relatively low levels of volatility. In fact, as shown below, only one auction amongst the last 12 has shown a move of +/- 4% and the last 3 auctions have seen the GDT index move less than +/-1%.

How do you like them apples

The "Investors guide to the New Zealand produce industry" produced recently by Tim Morris and team represents an excellent snapshot of just how well the New Zealand permanent crop sector is doing. The excellent climate, particularly for fruit production, has combined with innovation in products/varieties, production systems, food assurance systems and product presentation and packaging to deliver on the horticulture sectors potential.

GDT 190 / dairy forecasts

Market Recap:

We are now several weeks into the new season and final price announcements for the 2016/17 are being made. It is too early for any commentary on the production side of the ledger! Price discussion this week was “headlined” by Synlait’s revised $6.15/kgMS 2016/17 final FGMP (down from a previously forecast $6.25/kgMS) with an average 14 cent premium across a number of “value add” categories including A2 milk.

Auction #189

It has been 3 weeks since the last auction and there has been a reasonable amount happening in the market:

GDT 188: Weak but good

The last auction result (+3.6%) was right at the top end of my expectations (+/-3%) and WMP was +5.2% but there has been limited follow through since in the futures market.

The result reinforced expectations for a final price for the current season slightly above $6.00 (the 2016/17 futures have strengthened from $6.05/kgMS to $6.11/kgMS) but since the last auction the 2017/18 futures price has weakened from $6.25/kgMS to trade at a discount to the current season at $6.00/kgMS.

2016/17 nearly over

The 2016/17 season is coming to a close and although there have been a  few surprises (March production data), the emphasis is now really on 2017/18.  It is worth noting that the year has been better than expected from a revenue and profitability perspective, notwithstanding the climatic challenges that farmers have been through. At the start of the season a $6+ milk price and a 40 cent dividend was something we would have all accepted without too much thought!

Where are the opportunities?

Most people have ambition for themselves, their career and ultimately for their family. People that make a difference generally want to engage in fulfilling work or endeavour within an industry that they love. Ambition means that they either want more important roles, increasing responsibility and the increasing [salary] rewards which go with this, or that they want to access a high growth opportunity so that they can rapidly build their wealth and participate in the rewards of asset ownership.

China Dairy situation update

The USDA GAIN report (available here) gives some insight in to what is going on in China - and it is basically pretty good news.

Under the bonnet with due diligence

Subject: 166 canopy hectare Vineyard development

Location: 1980 North Bank Road, Marlborough

Does earning 7.5% req a risky portfolio?

There have been several pieces of information over past weeks discussing the challenge for investors getting acceptable levels of returns with low levels of risk.

In a research brief by Callan, a real assets consulting practice based in the USA, they looked at rates of returns for (US) investors over the decades. Back in the 1990's, an investor could earn 7.5% from a simple portfolio of fixed income investments. Much the same could have been earned in NZ at the time.