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Thursday, July 17, 2014
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THE INDEPENDENT VOICE OF MID CANTERBURY
Economists ‘not helping milk price’ BY MICHELLE NELSON MICHELLE.N@THEGUARDIAN.CO.NZ
FULL STORY
P16
Punters at the Tinwald dairy cattle sale yesterday were not deterred by news of another sharp fall in international milk prices. PHOTO TETSURO MITOMO 160714-TM-013
Economists could be playing a part in falling international dairy prices – the backbone of Mid Canterbury’s nearly $1 billion dairy economy, local dairy farmer Willy Leferink says. The GlobalDairyTrade price index slumped by 8.9 per cent yesterday, to its lowest level since the December 2012 auction, marking a 35 per cent decline since early February. ANZ economists have revised their May forecast of a $7 kg farmgate milksolids price, saying the current spot prices are pointing toward less than $6 kg/MS for the 2014-15 season. Mr Leferink, who was Federated Farmers’ former dairy chairman, said he was disappointed with the news. “I think some of the comments made by economists last week didn’t help – those comments go worldwide in no time,” he said. “Economists predicting prices are still softening are not helpful in a climate where any news on the milk front is ana-
lysed to bits at the moment.” Mr Leferink said there was a long way to go before the end of the season, and the market could still move rapidly. “I see nowhere in the world where massive (milk) powder plants are being commissioned – but they are certainly being built. “In a year’s time it could be a totally different story – we might be looking down the barrel of a lower payout but I think this year there is still a long way to go and prices are very volatile.” He said stockpiles of milk powders, rather than the high New Zealand dollar, were causing prices to drop. “In the short term there’s plenty of produce on the market and the punters are waiting and watching,” he said. “They are waiting in the wings because the warehouses are full and they are hoping it might still get cheaper. “Once the market moves it moves rapidly the other way, and that’s what I’m predicting will happen. “The market does not always react with sanity – it is what it is and at least we’ve got some transparency.”
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