The Weekly Dairy Report: Rain on the horizon, but Fonterra still faces dark clouds over pricing and food safety

Another dry week in western Northland and down to the Waikato, has conditions now described as drier than last year, resulting in some herds being dried off, and desperate hopes for rain to come from an approaching Cyclone Lusi.

Cull cow numbers are building in the saleyards, and advisers suggest in the dry areas carrying capacity should be, what will be calved next season.

Other messages include, regular monitoring of BCS in cows, not grazing below residual targets, and dry stocks progress should be checked with regular weighing.

Fonterra has predicted a lift in milk flows to 7.5% ahead of last year as the rest of the country has adequate grass to cash in on the strong predicted payout. Through to February, production is 5% higher and if significant rain falls in the right areas from the weekends storm volumes will be much higher than last year and at a good price.

The global dairy auction prices however, adjusted downward by 4% as higher volumes dampened demand and pointed to signs that maybe the market has peaked. Oceania prices have fallen with this adjustment but even with more northern hemisphere product becoming avaliable prices are still at historically high levels.

Questions this week have been raised about returns from Fonterra and calculations of the milk pricing formulae. Debate arises on how much they are retaining for dry shareholders and future capital requirements which will penalise sharemilkers returns, issues that were mentioned in the TAF debate and now have come home to roost.

And in a continued fallout from the botulism scare, the Ministry for Primary Industries has charged Fonterra for breaking the rules associated with food safety and the dairy giant will plead guilty on all counts.

With approval by the Overseas Investment commission to buy Synlait Farms, Shanghai Pengxin now has, when the former Crafar Farms is added to this recent purchase, a majority interest in 12000ha of dairy land.

Environment Southland has enacted its resource consent process on all new dairy farms in the area, as this body looks to control this development in harmony with the land and water, and other regional councils are certain to follow suit.