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Time to take a breath

Key highlights

The first step in dairy’s price correction is complete.
As prices have now corrected higher on the back of a pullback in global supply.
From here we expect prices to consolidate, before prices lift again later in the season.
 

Report prepared by:

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


It’s time to take a breath. The dairy price correction over August and now September has been both swift and large.

In the last auction report, we discussed why we expect this price correction to stick – in this report, we discuss how we anticipate the rest of the season to play out.

First up, we expect prices to consolidate over coming auctions. As mentioned, dairy markets will need time to digest the rapid price turnaround and assess where to next.

From there, we expect prices to lift again later in the season. Indeed, while the market now anticipates weak global production, we see scope that the weakening in supply accelerates faster than most analysts expect. With that in mind, we look to NZ spring production data for a key test of our view.

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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