17 Aug 2016

Glass half full for dairy after price lift

2:11 pm on 17 August 2016

Dairy farmers could finally have break-even milk prices this season, AgriHQ dairy analyst Susan Kilsby says.

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Dairy prices lifted by 12.7 percent overnight. Photo: 123rf

This season's forecast of $4.25kg/ms is the third season of prices below $5.

Most farmers need about $5kg/ms to cover their costs, which is about $US3000 a tonne for whole milk powder, the industry's main export.

In the overnight Global Dairy Trade auction prices lifted by 12.7 percent and whole-milk powder surged 18.9 percent to $US2695 a tonne.

Prices were also strong this time last year with a whole milk powder price of $US2824 a tonne in October, which dropped to $US1890 in February and then the season ended on a dismal payout of $3.90kg/ms.

But Ms Kilsby said this time it was looking different.

"It's now looking more likely that we might get to a point where farmers can break even this season."

It was unlikely that whole milk powder prices would get up to $US3000 a tonne, but there had been a big lift this month, she said.

"I don't think we'll see it continue to lift at the rate it has done, but it's certainly looking a lot more positive.

"To hear it at this time of the year when farmers are flat-out calving and there is so much going on - a bit of positivity in the market will really lift spirits."

Former sharemilker of the year Charlie McCaig milks just over 1000 cows in Taranaki - and said the auction results were a good morale booster.

"It puts a smile on your face, but at this point I think we're just sitting still and waiting to see what happens. 'Cautiously optimistic' is the right word to describe how I feel about it."

Mr McCaig was 60 percent of the way through calving, and said it was going well.

"The sun is shining, milk prices are up - it's a good day to be farming today. Budgets are tight this year for sure and I think there will be a lot of people looking at that result and feeling a little bit better about the world today."

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