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Susan Kilsby, agriculture economist at ANZ, points out that the New Zealand’s forecast returns at the farmgate level have lifted due to dairy commodity prices improving more quickly than expected and this upward trend in pricing is expected to continue into next season.

Key Quotes

“We have therefore revised our milk price forecast for the 2018/19 season to $6.30/kg milksolids (MS) (previously $6.10/kgMS). Our forecast for next season is now at a healthy $7.30/kg MS (up from $6.90/kgMS).”

“The 2019/20 forecast is based on a weighted whole milk powder (WMP) price of USD2850/t for next season. This is approximately 5% lower than the current price. Next season’s forecast should be viewed with an air of caution due to the longer time horizon.”

“Global growth is slowing, and if this trend is not arrested it could negatively impact demand for dairy commodities.”