The Weekly Dairy report: Milk flows still tracking well ahead, but auction values fall as volumes drop

The rain in many areas of NZ has had a positive affect and more is looked for to bank the feed and set up for a positive boost to autumn production.

Milk flow volumes are  predicting estimates ahead of last year between 4-8% with the variation dependent on late summer rains and a growthy autumn.

Areas of Northland down to the Waikato have been hard hit by the dry, some like the Kaipara area reporting they are worse off feed wise than a year ago, when 15 farms were sold up due to financial pressure, and more are at risk now.

Good news for those replenishing nutrients after hay and silage harvesting this autumn, as big falls in potash fertilizer prices will help reduce the ever rising costs of production.

Farm debt is still on the rise and with the dairy sector holding 66% of this it is surprising farmers are not using the opportunities of two years of good prices to make large in- road into this major cost, especially as many are predicting interest cost rises next month.

Oceania dairy commodity prices continue to build to be now at such a level that some customers are looking to substitute dairy for cheaper ingredients to try and stay competitive and concerns are expressed at the over reliance on China in this product boom.

Latest auction prices have seen a fall  as the inevitable adjustment arrives, but with whole milk powders still at $5000/tonne nobody is panicing yet.

2,000 hectares of dairy land has been put on the market in Southland by the financially stressed Solid Energy to test an already buoyant real estate market with 3 existing milking platforms, two properties with conversion potential, and 4 support farms.

And in Canterbury a large parcel of dairy land is being offered on the direction of the High Court to dissolve a partnership between the estate of Alan Hubbard and West Australian interests that is expected to sell for more than $50million.

Synlait Milk has announced it is investing $66 million on a new milk testing laboratory, a canning line and more warehousing as it responds to increased Chinese demands for high quality and safe powder products.

And in an impressive efficency move Fonterra and a local Southland transport firm have pioneered  the use of hub silos which will reduce the number of trucks on the road collecting milk and lower collection costs for the processing giant.