The Weekly Dairy Report: Fonterra invests for the future but auction prices still falling

North Island growth rates broke through the 20kg/day barrier as feed builds, although Waikato farmers are noting the feed is slower than last year, and Northland is very wet.

In the south, grass is moving after the West Coast and Southland have experienced wet and cold conditions that have slowed feed supplies significantly.

The Australians are now predicting El Nino will not occur until the end of the year so northern farmers who are reporting an increase in black beetle numbers from previous droughts will be looking for more rain.

Positive market news of the week was from Fonterra, maintaining their $6/kg seasons prediction, investing big in a Chinese infant formulae company and a JV in Australia, and increasing the local processing capacity.

Against this Westland Milk Products, more exposed to skim milk powder pricing slashed its forecast to the $5.40-$5.80 range and cause more belt tightening from farmers on the Coast.

Landcorp announced that it more than doubled its operating profit in the last year on the back of it dairy exposure and was a large recipient of the guaranteed milk price scheme.

However it also reported that future plans will reduce their reliance on dairy as they look to expand their other farming enterprises.

The global milk market still has some downside reflected in the latest global dairy auction prices which  fell another 6% which will make some farmers and bankers nervous how long this  slide will last.

The Europeans have responded to the Russian dairy ban by storing butter, SMP, and certain cheeses, as global supplies of milk grow on the back of the removal of milk quotas in this region.

In the saleyards beef farmers are paying a premium for Friesian Hereford cross calves with the dairy sector recognizing the advantage of a colour marker, shorter gestation period, low birth weight, and high growth rate sires.