Last week much of the country thawed out and dried up nicely, but the reprieve was short lived with more snow, hail, and rain on the way to make wintering difficult.
North Island pasture growth rates are reasonable for this time of year but some areas are having issues utilising feed because of wet soil conditions, while the east coast of the south island is still very dry and conversations are turning to prospects this spring.
El Nino conditions build, with further intensification predicted and some climate models suggest this weather pattern could continue into 2016 as farmer confidence dropped even lower on the market and weather sentiments.
Further bad news from the market as the auction returns fell for the 8th event in a row, and whole milk powder prices dropped by 10%.
Global over supply, that has seen some US milk dumped into pits, combined with weak demand out of China, has resulted in new seasons bank forecasts being lowered, some now below $5/kg ms.
The dairy futures market reflects the present situation as later premiums have disappeared, although the heavy cow cull is equivalent to about 400 herds, as farmers seek to reduce costs with a lighter stocking rate on higher per head production.
Fonterra has responded with proposed job cuts, as the dairy giant plans to rationalise it’s personnel with more emphasis on the sales team, and after the demand for it's Gauranteed Minimum Price scheme is looking into put together longer term deals at a fixed price.
Milk processors are also coming under fire for the price of domestic dairy products that haven’t responded to the drop in market prices, like that being paid at the farm gate.
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given news
Mark Peart speaks exclusively with reclusive millionaire Baird McConnon about his company's bid for control of Wrightson, why it needs some love and the excitement of working with Craig Norgate
http://www.sharechat.co.nz/article/0232cecc/baird-mcconnon-s-quest-to-s…
A Landcorp slip of the tongue or a typo error??? Due to scaling-back, it would supply 6.5 million kg under the $5.65 GMP price.
http://www.stuff.co.nz/business/farming/dairy/69888408/fonterra-eyes-lo…
Tools, these are classic project financing / bond funding building block tools
with a fixed price from an investment rated entity (f) and operations run at fixed cost by a rated manager (l) it enables the an owner to gear up the project based on funding of fixed cashflows (like having an investment grade bond) the assets don't matter any more depending on the issue manager.
we wonder why OS investors should have the first opportunity to refinance operations with debt in order to refund earlier equity contributions (not the FDI chattered about yesterday).
we thought OS investors brought market and ss chain connections that could offer price gtees if needed (the trick here is that those china based entities don't pass credit/bond issue muster - are un/poorly rated).
think http://www.dakangmuye.com/en-us/product/ruye The Land
http://www.dakangmuye.com/en-us/index
http://www.bloomberg.com/research/stocks/snapshot/snapshot.asp?ticker=0…
If long term pricing was such a good idea, why not go to the banks for a milk loan or milk swap. Their can't doesn't mean others should.
from page 43, Industry Overview, interesting other view and metrics
http://www.asx.com.au/asxpdf/20150702/pdf/42zlbtjyx2h4n3.pdf
270 pages... I think I know where the farmers profits have gone...
Did you have any GMP related point or were you refering to
We have a TPPA which MAY open markets involving Australia (who are getting more than $4.40 NZ for last season) and New Zealand...or that the US production is 15% of world milk AND Europe is about 24% and we're staring at the face of TPPA in the case of US and quotas coming off in Europe, so if both of those increase production a mere 10% of current the NZ's 5% would drop to 1% of the pie?
Or perhaps that the metric for cost of production has, only for NZ, risen year on year _every_ year since 2009 ?
And that's not counting China production internally or exported, going with the 92% internal consumption, which was aided by Fonterra bypassing the NZ shareholder-suppliers. (do the production of Fonterra in China milk production even show up on gDT? or WMP revenue?...
Not a time to be a NZ dairy farmer, that's for sure. Wonder what will happen when fonterra goes offshore? Already big cuts in staff numbers promised. Can't be much longer given NZ 5% milk production share, and NZ companies 29% share of international trade. Won't take long for MBIE to chase the pigeons away.
gdt not equal to commodity pool price
It should be noted that, while Fonterra’s GlobalDairyTrade auction system provides some market visibility on dairy commodity prices, it only represents a portion of Fonterra’s commodity product sales and therefore it is only one indicator of underlying commodity pricing being achieved by all exporting processors.
Once again no comment about the difficulty Southland farmers are facing with the wet - one of the wettest June's in 30years in some districts.
It appears only North Island farmers and those on the South Island East Coast are they only ones of interest to the media. So which province had the biggest drop in production for Fonterra, in December 2014 and remained behind for the rest of the season?? There was only one and it sure wasn't in the North Island nor the East coast of the South Island.
Yet the northern hemisphere is cooking "nicely"
http://edition.cnn.com/2015/06/01/asia/india-heat-wave-deaths/index.html
http://www.firstpost.com/world/pakistan-heatwave-over-1330-dead-in-sind…
Cannot say ive noticed any real southerlies yet, bad for bugs in the summer i expect.
And speaking of summer if NZ follows the northern hemisphere "too wet "will be wished for.
"Hottest July day ever recorded in UK"
Institutional folk have long memories (fund managers not brokers) and when they don't like a face.
Fonterra Shareholders’ Fund Units FSF $4.760
https://www.nzx.com/markets/NZSX/securities/FSF
Disclosure of ceasing to have substantial holding: PERPETUAL LIMITED and subsidiaries
(c) total percentage held in class: 3.86%
comment as to who has hopped in - still to come.
for the other folk, a wad of nominees
http://www.asx.com.au/asxpdf/20150708/pdf/42zpmv7kg261lt.pdf
5 and 6 aside
and we await more news on the super equity trust (as October is now, if thats when you want to settle)
It is understood it could start in the low hundreds of millions and possibly grow into billions.
http://www.afr.com/business/agriculture/fonterra-eyes-rival-farmers-wit…
Fonterra Australia chief executive Judith Swales says the dairy giant's new Equity Partnership Trust should help the company win farmers from its competitors. The trust could be ready to start making its first investments in dairy farms in about October this year, she said.
reference bottom of page 5.
http://www.myfarm.co.nz/sites/default/files/investmentnewsjuly2015.pdf
For $7.75 they're talking in current system (with 0.69c NZD:USD) of needing $3,500/tonne
with article quoting price just up the page of current $2,300/tonne.
that's 50% increase in price, and there is little indication demand is going to lift price, now that they seem to have got the measure of the auction system. And on-coming expansions (China, Europe, US, even Canada) looks very ready to keep things in oversupply
What I found interesting though - traditional NZ's biggest supply period has been our peak time, which corresponds with Northern hemisphere's Winter, which fitted both parties well. Yet they predict most export demand to be Aug-November, which is 2 - 3 months earlier, which would be the tail of Northern hemisphere's production, rather than it's gap ?
I'll look through the other sheet with metrics later this week, I've got university course work coming in this week, and I'm studying a technical communications course where they gonna learn me to use writing to talk good on the computas.
Cowboy, looks like China is also eyeing the export market for dairy
products.http://www.dailymail.co.uk/news/article-3157040/China-s-mega-farm-100-0…
From the USA
Spot domestic cheese prices have been able to disregard rising
inventories, but overseas markets continue to slide. Cheese
prices in Oceania have not been this low since 2009, and
German Edam prices are at levels not seen in more than a
decade. U.S. cheese exports lost ground in May and they are
fast becoming even less competitive. May cheese exports
totaled 64.7 million pounds, down 10.2% from April on a daily
average basis and 7.6% less than May 2014. Butter exports were anemic in May, falling to 3.5 million pounds, the
lowest monthly total since August 2009. The chasm between U.S. and
overseas butter markets continues to widen, so exports are likely to
remain low, while imports climb. In May, the U.S. imported 3.1
million pounds of butter and 3.6 million pounds of anhydrous milkfat.
Butter imports were 80% higher than May 2014 shipments.
Exports of NDM and skim milk powder (SMP) totaled 133.6 million
pounds, up 2.2% from April on a daily average basis and slightly
more than May 2014 volumes. Exporters from the U.S., Europe and
New Zealand are competing fiercely to rid themselves of excess milk
powder, and prices are likely to remain under pressure. As the Daily Dairy Report noted earlier this week,
“If China’s economy suffers a setback, it is likely to impair
economies around the globe. The U.S. dairy industry could
suffer from reduced demand from China, primarily, but also
from other markets – including our own – where economic
growth has been bolstered by Chinese consumers.” A squall in
China would cause rough waters in Australia and New Zealand,
but it could also ripple painfully through the U.S. dairy market.
http://www.milkproducerscouncil.org/updates/071015.pdf
Noted a couple of references in some of the links to the $NZ $US rates and Fonterras hedging on it. It's been worrying me for some time that this is going to effect our final price badly as they are not known for getting this right when the $NZ is dropping. Of course it's commercially sensitive so we may never know.
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