Rabobank predicts New Zealand dairy season will be profitable - Cowsmo

Rabobank predicts New Zealand dairy season will be profitable

Opening forecasts from milk processors for the new dairy season are pointing towards another profitable season, Rabobank says.

The positive pricing signals from processors reflected the improved commodity markets over the beginning of the year and that markets would remain largely balanced over the coming season months, the bank’s latest Agribusiness Monthly said.

Although the final tallies were yet to be counted, the recovery in milk production over the last few months suggested production for the 2017-18 season was likely to end up flat on last season.

Total milk collections for the 2017-18 year would likely end at around 21.4 million tonnes of milk, the third-highest of New Zealand milk production level.

Stronger milk flows for the second half of the season were supported by improved weather conditions, underpinning a solid finish to the season.

Under the phased eradication plan for cattle disease Mycoplasma bovis, 126,000 cattle were tagged to be culled, in addition to 23,000 already culled.

While that was not enough to significantly affect national milk production forecasts, further testing of the national herd for the bacterium would take place over the coming spring period.

A significant rise in infected properties, and therefore herds to be culled, would warrant production forecast revisions, the report said.

After falling steadily during April, beef schedule prices held relatively steady through May as the slide in US imported beef prices ended, and domestic cow numbers began to tighten.

At the start of June, the North Island bull price was 2% higher month-on-month, averaging $5.25kg cwt. The South Island bull price was down 1% month-on-month, averaging $4.90.

Prices in both islands were 5% lower than this stage last season.

Schedule prices continued to edge higher during May on the back of a seasonal slowdown in  lambs available for slaughter.

At the start of June, the slaughter price in the North Island averaged $7.55kg cwt (3% higher MOM). South Island lamb averaged $7.35 (4% higher).

Lamb supply would keep dropping until September, which should ensure enough procurement pressure to support  further upward price movement.

However, it was unlikely price gains would match those traditionally experienced over that period, the report said.

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