The Weekly Dairy Report: No rain in forecast for very dry areas but payout predicted to rise

There is hope that the drought maybe breaking with more misty rain days which is keeping the brassicas alive, but in the-at risk areas too little, too late.

Significant rainfall over the next month will be critical for a turn around, as historically a drought running into the autumn is most severe in its financial implications.

Pasture growth forecasts have started to move from North Otago south, but from Timaru to Kaikoura they make grim reading, and farmers in these regions will be using their drought strategies for a while yet.

The Opuha Dam has finally run out of water and all irrigation stopped as foothills rain has not come, and this will put all reciepents who have invested heavily in this scheme in a dire situation.

This has increased the calls for this scheme to be supplemented by mountain water and shareholders are urging the propsal to build more storage for the Rangitata Diversion system which could top up Opuha when needed.

Many areas in the North Island are also predicted to have no pasture growth over the next two weeks and while the cricketers will be happy, farmers will not.

Seed companies are suggesting farmers should sow early even into a dry seedbed, and wait for rain to ensure good plant establishment before winter.

The first stage of the Central Plains irrigation scheme is on target with construction, and gives dryland farmers in its catchment, an assurance that this year’s major drought should be the last one they have to endure.

As global milk production volumes fall, prices lift, and another strong auction saw a 10% price lift for all commodities.

Best of all, was whole milk powder prices which rose 13%, as Fonterra reduced supply volumes by 42% in the February March period, and closed in on the $3500/tonne March trigger, needed to achieve a $4.70/kg ms result.

ASB and Westpac were sufficiently impressed by this result to lift their predictions to $5 for the year and suggest $6.50 could be the target for next.

Fonterra's regular update of milk prices is expected tomorrow and some bank economists believe it will rise to $5.00/kg ms giving all in the sector hope that this price downturn will be short lived.

Managers are culling hard any inefficient cows into a tight processing market as they choose to destock, rather than buy in supplements to balance the supply and demand feed equation.