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A long and winding road

Key highlights

Dairy prices dropped for the fourth successive auction this year.
As the short-term NZ milk production outlook improves versus earlier expectations.
We trim our 2015/16 milk price forecast to $3.90/kg and take our 2016/17 forecast down to $6.00/kg.

Report prepared by:

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



The dairy price ducks refuse to line up.  First, good growing conditions have moderated the anticipated dip in NZ production this summer.  At the same time, global growth concerns (read China) and commodity market weakness continue to spillover into dairy markets and side-line buyers.  It seems dairy can’t catch a break.

In the end, we still expect lower NZ supply to boost prices.  But this adjustment is taking more time than we anticipated, and therefore our milk price outlook has changed.  In particular, dairy prices will start the 2016/17 season lower than we anticipated earlier in the year.

As a result, we have trimmed our 2015/16 by 20 cents to $3.90/kg.  Similarly, we have moved down our 2016/17 forecast by 50 cents to $6.00/kg.


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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