Milk forecasts go both ways

BANK lending to the agricultural and horticultural sectors grew in the June quarter, led by Rabobank and ASB, while ANZ decreased its still market-leading position.

Total lending at June 30 was $60.82 billion, up by $64 million compared with March 31.

ANZ went down by $292m, Rabobank up by $220m and ASB up by $124m.

ANZ remains with the largest market share, 26.3%, followed by BNZ on 21.1%, Rabobank 18.7%, ASB 16.9%, Westpac 15.2% and Heartland 1%.

It was the first quarter of loan growth for some time because the dairy industry dominance has in recent times featured loan repayments from good milk payouts.

In the latest quarter of Reserve Bank of New Zealand reporting on agri-loans, dairy’s share fell by $199m to $38.18b, whereas horticultural borrowing increased by $218m to $5.95b.

Lending to sheep, beef, cropping and other agricultural businesses was steady at $17.5b.

Dairy loans have fallen by $1.63b over 12 months, a 4% rate of decrease.

NZAB, the NZ-wide agricultural loan broker, which analysed the Reserve Bank figures, pointed out that lending to agricultural and horticultural sectors is less than 13% of total bank lending.

That indebtedness total is now $478b, up $10b or 2.1% over the quarter, and up 6% in the past 12 months.

Some 80% of that growth was in home loan debt.

ANZ is the biggest loan bank, at $140b, followed by ASB, BNZ and Westpac all with $90-$100b each.

Banks reported that 1.48% of their agri-loans were classed as non-performing and the range across all banks varied from 0.5% for ANZ to 2.9% for Rabobank.

D r Bert Quin Dr Bert Quin

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A PREDICTED slowdown in Chinese import demand for milk powder is why Rabobank has trimmed 20c from its farm gate milk price forecast, now $7.80/kg milksolids.

The analysis of China’s needs and the cut in milk price expectation were done before the latest Global Dairy Trade (GDT) auction, in which the price index rose 4% and whole milk powder rose 3.3%.

Rabobank senior analyst Emma Higgins says all eyes are on China, our key export market, as the risk of downside in the milk price forecast.

“Supply is outpacing demand in China, with domestic milk production growth combined with growing inventories of dairy products,” Higgins said.

“These factors point to the potential for a period of destocking later this year and into 2022.”

Higgins says GDT prices had moved sideways or lower for the past six months, until the latest lift.

“Despite last week’s lift, we see a strong possibility that the nearterm peak in global prices is likely behind us,” she said.

“Our $7.80 forecast is at the lower end of all analysts’ expectations right now, but it would still be an excellent result for our dairy farmers – the secondlargest in Fonterra’s history.”

Rabobank’s Dairy Quarterly Report said China’s own milk supply is growing 6-7% annually and its milk powder importing has been up 40% in the first half of 2021.

It forecasts that importing will fall by 18% in the second half to drive some destocking.

Higgins also commented on other global supply and demand dynamics, which would influence the farm gate milk price.

These include the shape of the NZ spring peak and how global dairy demand holds up in the face of reductions in fiscal aid from governments worldwide.

High feed costs and growing margin pressure in the northern hemisphere may influence milk production, along with the added strain of inflation.

But while Rabobank counselled caution, BNZ senior economist Doug Steel published an upbeat research note on the milk price outlook and raised his estimate 50c to $8.30.

He says the balance of risks surrounding the milk price forecasts had moved upward and the $8.30 was not a precise estimate because of the time of the season and all the moving parts.

“The bounce in GDT prices follows a general lift in global risk appetite over recent weeks helping underpin demand,” Steel said.

There was firmness to the underlying demand and forward price curves showed high prices extending into next year.

Fonterra had removed quantities of WMP from the GDT platform citing strong demand through other sales channels.

Milk production growth in the European Union had been subdued.

“We still don’t expect a strong global milk supply response to strong dairy prices,” he said.

Even though the NZ season has started strongly and grass growth has been favourable in most of the country, BNZ doesn’t expect milk production this season to be greater than last season.

That is due to good production last season and the trend to fewer cows.

Steel pointed out that the NZD had risen 2.6% in value against the USD in the three weeks before the latest GDT event, which tended to work against the 4% index lift.

In summary, “the dynamics and balance of risks appear to be changing with robust demand bumping up against subdued supply”.

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Damian and Jane Roper farm a 320 hectare dairy farm in South Taranaki. Their journey to owning their own farm has not been something that has happened overnight and has allowed them to explore some interesting and varied experiences along the way. Read the full article at

and see if you can answer the following questions. 1 What were some of the other jobs that Damian and

Jane did before dairy farming? 2 How long did it take them to own their own farm? 3 How many cows do they milk? What is their milk solid (MS) production per cow? 4 What supplementary feeds do they grow for their cows? 5 What do they use to decrease supplementary feed wastage?

What was the difference in the amount of feed fed in the first year of its use? 6 The Ropers journey learning te reo Māori allowed them to see that Māori environmental values were identical to their own.

What are these? 7 Damian and Jane are members of the WelFarm group. What is this and what purpose does this group serve? 8 What have the Ropers decided to replant their current 100ha pine lock with when it is harvested?

Identifying stress in yourself:

Firstly, don’t compare what you feel stressed about to someone else’s stress. It is hard because our friends and family tell us what they are worried about and sometimes it can make our own situation feel inadequate. IT IS NOT! Always remember everyone has their own things going on in their life and so we cannot compare our journey to that of someone else. You are allowed to ‘feel all the feels’ and our abilities to handle how we are feeling are all so individually different. So don’t ever be hard on yourself as you learn how to grow your own resilience to life.

What are the physical signs of stress?

*If you think you are suffering from stress and need help managing it, please talk to an adult in your household or ring/ text 1737 to talk to a trained counsellor. https://1737.org.nz/

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What are the psychological signs of stress?

and close your eyes, handson your tummy, lying on your back with your legs up the wall is the best position! ~ This brings you back into rest and digest mode and out of

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1 What is the latest value? 2 When have values been at the lowest level in the last two years? 3 When have values been at the highest level in the last two years?

1 How does the latest NI mutton value compare to the previous season? 2 How does it compare to the five-year average? 3 Due to strong demand from China, and growing interest from the US, the July average export value for mutton settled at $8.75/kg. What is the percentage difference compared to the five-year average of $5.99/kg and last year at $6.74/kg?

Calf Club NZ - Our fundamental goal is empowering rural kids across the country to care for and compete with their pet calves, and ensure the continued growth and development of our young farmers. Each year we see hundreds of stories and friendships develop between kiwi kids and their animals.

This picture demonstrates the correct way to hold your calf’s lead rope

Is this your first year of Calf Club? Fear not! Here are a few tips and tricks from Calf Club NZ to help train your calf and improve your leading/rearing skills. Leading and Control - Georgia Whitworth, Calf Club NZ Judge

"One thing I love to see as a judge is a really happy kid. Make sure to have a big smile and stand nice and proud. When walking your calf, hold close to the halter so it can understand your movements." A Clean Calf - Crystal Scown, Hauraki Dairy Trainee of the Year 2020

"Calves don't stay clean for long. The trick is to give them a good wash the night before and leave their cover on overnight. Give them a good brush every day, and if they are moulting use a rubber glove to get rid of the loose hair. Overall make sure you love your calf and have fun." For more info head to www.calfclubnz.co.nz