The Weekly Dairy Report: Milk income predictions fall and upturn may take longer than first predicted

A quick burst of cold weather has interrupted the building spring grass growth rates but nationally feed and weather conditions are being viewed favourably with some areas welcoming the rain.

Good flows of milk are arriving at processing plants well ahead of last year but with most global dairy countries also increasing production this is just what the market does not need at present.

The Russian import ban combined with a failing Russian economy has disturbed the balance in the global dairy market and pushed prices down further.

More banks are adjusting their forecasts back to the low $5/kg ms and Synlait even further to $5 flat, which is at a level many farmers say is unprofitable.

What is insulating these falls somewhat is last years record payout with Synlait announcing an $8.27 2013/14 return in their bitter sweet announcement.

Fonterra have followed by confirming the $8.40 result on a hugely reduced profit and have also dropped the forecast to $5.30 next year which is about what farmers were expecting.

Federated Farmers have reminded farmers that averaging last seasons return with this seasons forecast gives a mid $6 return but warn producers that the present levels of income may take two years to rebuild and very tight budgeting will be needed to survive the short term problems.

While the fall in the dollar has been helping, the election result may halt this slide and with nitrogen price hikes of 4-10% and compliance costs rising, this will be a tight period for all in the industry.

In Southland a group has been set up to try and quickly solve the health issues associated with winter feeding of HT swedes with dairy cows, as the time for sowing next years crop is rapidly approaching.

A big spike has been noted of cull cows sold at southern saleyards that could be reflective of the true extent of this animal health outbreak that now appears to have affected other species.

As calving comes to a close, management focus should be turning to planning for next years winter feed requirements and ensuring BCS of animals is on target and staff are upskilled on heat detection procedures for mating.