MILK SUPPLY AND DEMAND

Turning the corner

The gDT auction yesterday was a pleasant surprise.  But not surprising at the same time; I had personally expected a 10% gDT rise at some time - but my pick had been prior to Xmas.

What has happened?

The first point is that China is starting to buy again.  They bought a similar amount of WMP from NZ in 2014 as they did in 2013 but the buying pattern resulted in high demand 1H 2014 (along with high prices) and low demand in 2H 2014 (with low prices).

Westpac says soft commodity demand is structural

In their Fortnightly Agri Update, 5 February 2014, Westpac outlines their view of the future for soft commodity returns.  The segment below is copied directly from their report.

Westpac says soft commodity demand is structural

In their Fortnightly Agri Update, 5 February 2014, Westpac outlines their view of the future for soft commodity returns.  The segment below is copied directly from their report.

Chinese demand an unstoppable force

In 2013 China brought nearly 620,000 tonnes of milk powder, a 53% increase on 2012. New Zealand supplied 91% of the milk powder imported by China.

 

Chinese demand an unstoppable force

In 2013 China brought nearly 620,000 tonnes of milk powder, a 53% increase on 2012. New Zealand supplied 91% of the milk powder imported by China.

 

Chinese demand growth projected through 2014

The following is an excerpt from Agrimoney.com - Published 27/12/2013

Dairy demand not 'fly by night'

One thing (among a number) that Australians do is produce very good economic reports.  Dairy NZ and some of the banks do a reasonable job in NZ but ABARE (kind of equivalent to our MPI) and dairy Australia do even better.

Some interesting dairy statistics

IFCN, an organisation that considers costs and prices for international dairy, met last week with their annual conference.  Their key projections, through to 2023 are as follows:

How high is high?

Dairy commodity prices increased overnight - there have now been increases for eight auctions in a row.  This was again a double digit increase averaging 14.2% across all products as non-whole milk powder products 'caught up'.  As shown in the following graphic, whole milk powder is now over US$5100 per tonne and in uncharted territory.

Going as forecast

MyFarm forecast rising milk prices with the eventual outcome a milk price with a '$6' at the start.

It doesn't feel quite right to feel happy at someone else's misfortune but many American farmers have crop insurance - so I'm making an exception to this rule.