ANZ has revised down its forecast to $9.65 per kilogram of milk solids for the 2025/26 season. Photo: 123RF
The big banks are responding to an ongoing drop in global dairy prices, with the ANZ the latest to trim its farmgate milk price.
ANZ has revised down its forecast to $9.65 per kilogram of milk solids for the 2025/26 season.
Against its previous forecast of $10.00/kgMS, the latest figure released on Friday represents a 3.5 percent downgrade in the expected payout.
This follows the lead of the BNZ which, on Thursday, revised its figure to $9.50/kgMS and the NZX, which lowered its forecast to $9.49 /kgMS.
ANZ agricultural economist Matt Dilly said dairy prices are coming under increasing downward pressure with surging global supply.
Since its high in May, the GDT Price Index has dropped 18 percent.
Global dairy prices, particularly butter, have dropped amid strong milk production in New Zealand and other major dairy exporting markets.
On top of that, whole milk powder prices have slumped nearly a quarter since May.
"Dairy prices peaked in May with the benchmark whole milk powder (WMP) prices well over USD4,470 a tonne, now whole milk powder is looking at USD3405," Dilly said.
"The benchmark whole milk powder (WMP) price has dropped 23.8 percent over that time. But in our view, it's butter that's been driving the dairy market since early last year.
"Butter prices were really high last year and no one could make enough of it. Now everyone's making too much of it."
The production situation has improved this year in both the EU and the US. In both markets, the fat components of the milk are also rising strongly, which means more butter can be made from each litre of milk.
One mitigating factor for dairy farmers here is the weak New Zealand dollar.
All eyes in the rural sector will be on Fonterra's quarterly update on December 4 when it also releases the first quarter FY2025 trading results.
The dairy co-operative is forecasting a midpoint of $10/kgMS but it too is likely to come under pressure to revise downward.
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