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Dairy price bottom is nigh

Key highlights

Dairy market fundamentals are taking a back seat to very weak market sentiment for now.
Accordingly, we expect Fonterra to revise its forecast to circa $4.00/kg this Friday, with risks it goes lower.
However, taking a step back (and a deep breath), we expect the dairy price bottom is nigh.

Report prepared by:

Nathan Penny, ASB Rural Economist
Phone: +64 9 448 8778
Email: nathan.penny@asb.co.nz


Very weak sentiment continues to drive dairy markets and prices lower.  It seems at the moment that no one wants to catch the falling dairy price knife.  

But dairy prices will eventually turn (they always do).  With prices very low, buyers may look to grab a bargain while they can.  Moreover, global dairy supply is gradually tightening, plus there is the possibility of el niño-caused drought this summer.

For now, however, the risks are down.  No more so than this Friday where we now expect Fonterra to revise its 2015/16 forecast to circa $4.00/kg, with risks that it goes lower.

Read the full PDF Report

Important Disclaimer - The views expressed herein are those of the authors and are based on information believed but not warranted to be correct. Any views or information, whilst given in good faith, are not necessarily the views of ASB Bank Limited and are given with an express disclaimer of responsibility and no right of action shall arise against any of the authors, ASB Bank Limited or its employees either directly or indirectly out of any views, advice or information.
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