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Gotta have faith

Key highlights

As we expected Fonterra stayed the course on its 2015/16 milk price forecast of $4.60/kg.
Indeed Fonterra expects dairy prices to recover over 2016 – a view that we share.
Nonetheless, prices still have a lot of ground to make up in order to hit this season’s milk price.

Season End Farmgate Milk Price Forecasts*

 

Report prepared by:

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


Summary:

As we expected Fonterra stuck to its 2015/16 milk price of $4.60/kg of milk solids.  At this juncture, we and Fonterra share the view that dairy prices are likely to rise over 2016.

Nonetheless, prices have a lot of ground to make up in order to hit the level required for the $4.60/kg forecast.  With this in mind, the risk remains that prices don’t quite get there by season end.

Our long-run dairy view remains positive.  In other words, while there are risks that this season’s doesn’t reach $4.60/kg, we are more confident that the milk price will lift to $6.50/kg next season and average at that level or above in the long run.
 

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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