The Weekly Dairy Report: Winter wet in the south, dry in Canterbury but near the norm over the rest of the country

Pasture growth rates are reverting back into winter mode in most regions, but there are still concerns about the lack of soil moisture reserves in much of the Canterbury region.

North Canterbury is in serious deficit with more capital stock livestock sales occurring, and support services are looking for more surplus stored feed to feed the stock that's left.

Southland has been wet, and concerns are being raised about utilisation of brassica forage crops in the muddy conditions and managers are being advised to adjust feeding rates upward, so animals can reach calving BCS targets.

Early reports suggest there has again been animal health issues with feeding of fodder beet and HT Swedes to dairy cows, and farmers are being urged to transition slowly over 21days.

Fonterra is bringing in the consultants to review it’s management structures, as it looks to reduce costs and restore the severely dented confidence of the shareholders.

Shareholders are grumpy and are getting vocal in expressing their thoughts, not only about the price they are getting for milk, but at their significant shareholding investment now trading at close to half it was since 2013.

The past production drive for more milk is not the strategy for the future, warns the KPMG’s agribusiness chief, who suggests the sector must add more value to it’s products, but Fonterra latest results shows little of this filtering through to farmers pockets.

Latest estimates suggest this years milk flows will be ahead by 3.5% after a late production flourish, but this will just mean stocks will be slower to clear, although with a heavier cow kill and tight cashflows predicted, the new seasons totals could be lighter.

Synlait reduced this year’s payout prediction to $4.40-$4.60/kg ms, but estimated next years at $5.50, aimed higher to help its suppliers cope better, with early cash flow issues.

The Open Country Dairy CEO warns farmers that the upturn will be slow to arrive as supply exceeds demand at present, and European farmers have little incentive to reduce production levels.

The auction overnight returned the seventh consecutive drop in values, to re-emphasise  global over supply, even as Whole Milk Powder offer volumes were at yearly lows.

With small price drops for powders and prices in Europe close to the intervention price, some dairy analysts believe we are close to the bottom, and we just need to clear the significant stocks before any upturn will arrive.

As the  present imported milk powder prices are now below the cost of Chinese domestic raw milk,  traders could return to boost this important market and start the upturn.

Oceania prices for dairy commodities hit new lows for skim and whole milk powders and cheese, but the easing currency has been helpful to halt the decline in NZ$ terms.