https://www.nbr.co.nz/article/prices-may-drop-third-straight-global-dairy-auction-b-200907
Dairy prices stabilising, but NZD dancing to its own tune!
• Dairy prices post a 1.1% fall in overnight auction.
• With the NZ season nearing its end, the downward pressure on prices from extra NZ milk is running out of
puff.
• Accordingly, we expect dairy prices will find a bottom over the coming auctions.
• While dairy prices are stabilising (largely as expected), the strong NZD and weak USD combo has led us to
revise down our 2015 season farmgate milk price forecast to $7.00 per kg of milk solids.
We expect prices to recover over the second half of 2014.
GlobalDairyTrade Summary
Dairy prices are starting to stabilise. While last night’s overall price fall was the sixth consecutive fall, at 1.1% it was the smallest fall during this stretch. Also as we’ve noted in previous updates, the price pattern since the start of the year is mirroring the 2012 season. With a similar leap in production in both seasons (of over 10% annual production growth), prices have followed similar path down. Of course, the New Zealand season eventually comes to an end and with it downward pressure on prices.
While dairy prices are stabilising, the strong NZD led us to revise our milk price forecast to $7.00/kg. the coming auctions we expect prices to stabilise further and for prices to begin recovering over the second half of 2014.
Farmgate milk price forecast update While dairy prices are stabilising, the strong NZD led us last week to revise down our 2015 season farmgate milk price forecast to $7.00 per kg of milk solids. Here we expand on our forecast change.
Our revised 2015 season forecast compares to our previous forecast of $7.80/kg. If you recall, our
previous forecast, while factoring in much of the recent dairy price falls, was predicated on the NZD
falling against the USD. 7 May 2014
In this case, the NZD strength is more a reflection of a USD weakness. Our forecast has the NZD at 87 US cents by
Dec 2014, compared to 77 US cents previously. Our previous milk price forecast was predicated on the NZD falling against the USD.
We have factored in a return to profit for Fonterra’s cheese and casein business. Looking over history, $7.00/kg still represents a top-four season. In this case, the NZD strength is more a reflection of a USD weakness. Often the NZD follows movements in New Zealand’s commodity prices. However, over 2014 the US economy has struggled through a harsh winter, with the USD reflecting the weaker performance. We now expect the USD weakness to continue
and for the NZD/USD to remain at around its current level over 2014 and into early 2015. Our updated forecast has the NZD at 87 US cents by December 2014, compared to 77 US cents previously. We continue to see the US economic
recovery as largely on track, accompanied by rising US interest rates in the second half of 2015; however, we have delayed the timing of when the USD responds to these developments. Reflecting this revised exchange rate view in our 2015 farmgate milk price forecast lowered our estimate to $7.00/kg. This compares to our previous forecast for the 2015 season of $7.80/kg. If you recall, our previous forecast while factoring in much of the recent dairy price falls, was predicated on the NZD falling against the USD. Putting the exchange rate aside, we expect
overall dairy prices to average around US$4,000/MT for the 2015 season, from around US$4,750 for the current season. Since February, we’ve seen the GlobalDairyTrade price index fall over 20%. As production growth returns to more normal levels and global demand remains solid, we expect dairy prices to recover over the second half of 2014. The $7.00/kg estimate for next season also factors in that cheese and casein prices hold up relative to milk powders over the season. Effectively what this mean is that this part of Fonterra’s business returns to profit, unlike during the 2014 season. On that front, it’s so far so good, with cheese and casein prices holding up better than milk powder prices. While down on the stellar 2014 milk price, a $7.00/kg forecast nonetheless represents a
healthy return. Looking over history, $7.00/kg still represents a top-four season. 2013/14 2014/15.
CREDIT ASB bank, Nathan Penny
Tagged dairy farmers, dairy farming, fonterra
Deteriorating conditions Impacting on Farm Sales
News Release 19 March 2013
Deteriorating Conditions Impacting On Farm Sales
Summary
Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 28 more farm sales (+8.0%) for the three months ended February 2013 than for the three months ended February 2012. Overall, there were 379 farm sales in the three months to end of February 2013, compared with 399 farm sales in the three months to January 2013, a decrease of 20 sales (-5.0%). 1,445 farms were sold in the year to February 2013, 11.6% more than were sold in the year to February 2012.
The median price per hectare for all farms sold in the three months to February 2013 was $21,951; a 1.43% increase on the $21,641 recorded for three months ended February 2012. The median price per hectare decreased by 8.5% compared to January.
The REINZ All Farm Price Index eased by 3.3% in the three months to February compared to the three months to January, from 3,039.77 to 2939.42. Compared to February 2012 the REINZ All Farm Price Index fell by 9.0%. Further details on the REINZ All Farm Price Index are set out below.
Seven regions recorded increases in sales volume for the three months ended February 2013 compared to the three months ended February 2012. Auckland recorded the largest increase in sales (+17 sales), followed by Nelson (+16 sales) and Waikato (+11 sales). Seven regions recorded decreases in sales volume with Canterbury recording the largest fall (-16 sales), followed by Manawatu/Wanganui (-5 sales) and Southland (-3 sales). Compared to the three months ended January 2013 six regions recorded an increase in sales, lead by Southland (+4 sales).
“In spite of climatic conditions affecting the greater part of the North Island, there has been good demand for dairy units throughout the country, particularly for well irrigated properties in Canterbury,” says REINZ Rural Market Spokesman Brian Peacocke.”
“There has been steady activity for hill country sheep and beef units in Taranaki and Gisborne, although heavy reductions in income are predicted for the pastoral farming sector due to falling schedules. Increasing activity in the Bay of Plenty reflects a quiet re-emergence of optimism in the kiwifruit sector.”
Grazing properties accounted for the largest number of sales with 44.6% share of all sales over the three months to February. Dairy properties accounted for 20.3%, Finishing properties accounted for 18.7% and Horticulture properties accounted for 7.9% of all sales. These four property types accounted for 91.6% of all sales during the three months ended February 2013.
Dairy Farms
For the three months ended February 2013 the median sales price per hectare for dairy farms was $33,254 (77 properties), compared to $35,530 for the three months ended January (82 properties), and $34,223 (61 properties) for the three months ended February 2012. The median dairy farm size for the three months ended February 2013 was 100 hectares.
Included in sales for the month of January were 17 dairy farms at a median sale value of $35,487 per hectare. The median farm size was 119 hectares with a range of 41 hectares in Taranaki to 260 hectares in Southland. The median production per hectare across all dairy farms sold in February 2013 was 792kgs of milk solids.
The REINZ Dairy Farm Price Index fell by 1.6% in the three months to February compared to the three months to January, from 1,749.36 to 1,722.22. Compared to February 2012 the REINZ Dairy Farm Price Index fell by 9.3%. Further details on the REINZ Dairy Farm Price Index are set out below.
Finishing Farms
For the three months ended February 2013 the median sales price per hectare for finishing farms was $19,029 (71 properties), compared to $18,852 for the three months ended January (69 properties), and $22,203 (66 properties) for the three months ended February 2012. The median finishing farm size for the three months ended February 2013 was 75 hectares.
Grazing Farms
For the three months ended February 2013 the median sales price per hectare for grazing farms was $12,900 (169 properties) compared to $16,250 for the three months ended January (176 properties), and $14,880 (180 properties) for the three months ended February 2012. The median grazing farm size for the three months ended February 2013 was 70 hectares.
Horticulture Farms
For the three months ended February 2013 the median sales price per hectare for horticulture farms was $118,371 (30 properties) compared to $89,047 (36 properties) for the three months ended January, and $202,500 (14 properties) for the three months ended February 2012. The median horticulture farm size for the three months ended January 2013 was eight hectares.
Lifestyle Properties
The lifestyle property market saw a 12.9% (+160 sales) increase in sales volume in the three months to February 2013 compared to February 2012. 1,403 sales were recorded in the three months to February 2013 compared to 1,243 sales in the three months to February 2012. 101 fewer sales were recorded compared to the three months to January 2013 (-6.7%).
10 regions recorded increases in sales compared to February 2012 while four recorded decreases in sales. Auckland recorded the largest increase (+85 sales), followed by Canterbury (+26 sales) and Waikato (+24 sales). Compared to January four regions recorded increases in sales with 10 regions recorded decreases. Taranaki recorded the largest increase in sales (+5 sales), followed by Canterbury and West Coast with four extra sales each.
The national median price for lifestyle blocks rose by $30,000 (+6.4) from $465,000 for the three months to February 2012 to $495,000 for the three months to February 2013. The national median price for lifestyle blocks is just $3,500 below the record high reached in January 2013.
The number of days to sell for lifestyle properties eased by six day, from 62 days for the three months to the end of cheap canadian viagra January to 68 days for the three months to the end of February. Compared to the three months ended February 2012 the number of days to sell improved by 10 days from 78 days to 68 days. Southland recorded the shortest number of days to sell in February at 39 days, followed by Taranaki at 46 days and Wellington at 49 days. West Coast recorded the longest number of days to sell at 230 days, followed by Bay of Plenty at 97 days and Northland at 88 days.
Commenting on the lifestyle property market Brian Peacocke said, “Sales activity was strong around the major centres, but steady to slow in the smaller regional areas with prices rising closest to Auckland and reducing further away from the city. There was also good activity in the Waikato, with Auckland buyers active in areas north of Hamilton.”
“In Canterbury areas north of Christchurch and Mid Canterbury are seeing solid increases in buyer interest with a corresponding rise in the number of listings.”
Tagged dairy farmers, farmers, Neville Kemp, property, Ray White Rural, realestate, Reinz
