New Zealand’s agriculture industry, including its key milk sector, faces a “positive outlook” which is set to boost investment, land agents said, unveiling a further uptick in values of dairy farms.
The Real Estate Institute of New Zealand, Reinz, said that while domestic sales volumes had eased back, the trend was “in line with” historical seasonal cycles, “as farmers focus on wintering activities and the season ahead”.
In fact, “morale throughout the rural sector… is being stimulated by the positive outlook for dairy, beef, lamb, venison and horticultural products,” said Brian Peacocke, the institute’s rural spokesman, although noting the wool sector as the exception, with New Zealand prices of the fibre hit by a retreat in Chinese imports.
‘Late surge of activity’
Such sentiment was “likely to encourage continuing investment” in these sectors, including dairy, which as a sector had seen its highest June sales volumes since 2014, before the downturn in prices set in.
Indeed, the dairy farm market had seen a “late surge of activity in Canterbury”, a major production region in South Island.
Dairy farm prices in New Zealand, the top milk exporting country, extended their recovery from an autumn low to stand at an index level of 1,881 last month, up 17.7% year on year.
However, they remain 13.0% below a high in September last year.
The average price per hectare across all farms sold in the three months to June 2017 was $25,993 per hectare.
Dairy market moves
The data come amid a recovery in dairy prices, which at GlobalDairyTrade auction, run by New Zealand milk giant Fonterra, have risen by 10% year on year, despite recent setbacks.
After steady increases in the GDT auction price from March to May, the latest two auctions returned respective decreases of 0.8% and 0.4%.
In the key European market, latest official data show a 1% decrease in the bloc’s average farmgate milk price in May to 32.9 euro cents per kilogramme, but this value is 25% higher year-on-year and 2.4% up on the five-year average.
GDT will on Tuesday hold its next auction – which Tobin Gorey at Commonwealth Bank of Australia said “might enliven an otherwise dull market”.