Fierce winds introduced October and again exposed minimal soil moisture reserves, with North Otago reporting conditions as the driest for ten years and temperatures unable to ignite the spring pasture flush.
On the lighter soils irrigators have started watering in what could be a long season in a still predicted dry east El Nino year and although the Opuha dam is all but full, dam managers have a 50% restriction imposed ahead of time to ensure stored water will be avaliable later in the season.
Many dairy farms in the south are still supplementing pasture with some silage to maximize production, even at the reduced stocking rates as a result of the heavy cull, as managers focus on preparing for mating with tail painting.
While in the North Island most farms are growing surplus pasture and will be soon conserving supplements to fill gaps of any future summer shortages, and advisers suggest heat detection is important in mating management and dedication and skills in this area only take time and care, not borrowed money.
The market has responded to the heavy cull and dry seasonal forecast that could see production fall by as much as 10%, by moving milk future contracts well ahead of past auction levels and analysts predict more prices rises should occur at this months events.
And overnight the auction rose for the 4th consecutive time with the event average prices rising by 9.9%, and most importantly whole milk powder prices closed in on the $3000/tonne benchmark that commentator's use as a breakeven parameter for the predicted payout.
By years end, the challenge may not be the international dairy prices, but farm production levels that need to be enough to cover the debt and high costs structures many farms are operating under.
Last week Westland announced a $4.95 payout for last year and improved the predicted payout to $4.90-$5.30, now closing in on the $5.50 level necessary to pay all the bills without further borrowing.
Farmers are grumpy with Fonterra’s unexpected pke restriction announcement especially in such a tough year financially, and are also cynical at the CEO wage freeze offer in the face of increased staff being made redundant.
Dairy access has proved to be the sticking point for New Zealand trade negotiators, and real concerns are being expressed on the plight of Fillipino dairy workers caught up in the immigration document scam, and who will do the work if they are sent home.
But again overnight a deal has been agreed by the partners of the TPP and while Fonterra has expressed disapointment more advantages have not been able to be achieved for the dairy sector, some progress has been made and the trade deals are an improvement on the past.
The Taranaki District Council have announced their intention to sell their extensive dairy investments in Tasmania as they look to cash up their profits from a different investment for a regulatory body.
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In other No.1 best buyer news its seems following the D20 meeting back in August
http://dimsums.blogspot.com.au/2015/08/chinese-dairy-industry-chosen-20…
efforts to revitalize the china industry have promoted policy action:
from last week
http://www.foodnavigator-asia.com/Policy/New-policy-will-wipe-out-80-of…
Seems in China infant formula brands will be cut from 2,000 to 400, as a brand will be based on its unique recipe and must have 6 nutrients different to any other brand/recipe (no marketing/pr spin there now).
and this week
http://www.foodnavigator-asia.com/Policy/China-enacts-toughest-food-saf…
new laws and a new regulatory system (just like that).
US based commentary on the China trade (from 6 weeks ago and probably before the Rosselkhoznadzor news came through) delves into WMP mechanics.
China imports, while no doubt significant over the long haul, have shifted into a lower gear. Domestic milk production is estimated to be up about 4 percent in the first half of his year (another 650,000 tons of milk in H1), and this excess milk is being diverted into powder, keeping inventories high. As a result, China has little need for substantial new imports. We think these stocks will remain excessive through at least Q1-2016.
In addition, Russia, once a buyer of 2-3 million tons milk equivalent per year from the EU, is now taking nothing from Europe.
These developments affect product mix. Europe is steering production toward SMP and butter to offset the loss of the Russia market. New Zealand is pushing production toward SMP and cheese to offset the slowdown in the China market for WMP. That’s turned up the volume on competition for the United States in key products and markets. So far, milk production has not responded to lower commodity prices. European production continues to expand, SMP is moving into intervention, and manufacturers’ stocks in both Europe and the United States are excessive.
From a US exporter view As a result, we don’t foresee the market tightening significantly before H2-2016. It will take at least that long to reverse the ill-timed milk production surge and work down inventories. In the meantime, conditions for U.S. exporters will remain especially challenging. Besides the heavy competition brought by excess supply, U.S. exporters are disadvantaged by a U.S. dollar that has strengthened across the board and internal cheese and butter prices that have moved well-above global indicators on the back of favorable domestic demand
http://www.usdec.org/assets/Documents/Supplier%20Site/Member%20Services…
- This would have made them grumpy re TPPA?
and from our man in Brussels
http://ec.europa.eu/agriculture/milk-market-observatory/pdf/market-situ…
showing how they are doing export-wise.
Now an update of super value added news from Ozzz.
The ongoing bread and milk wars can be seen in significant falls in bread and cereals pricing in the past year and almost flat pricing of dairy products in Deutsche's data.
Former Australian Competition and Consumer Commission chief Allan Fels said the rise of unbranded groceries was one of the biggest challenges facing many producers. "And it's spreading across more and more product categories," Mr Fels said. "If you don't supply (home-brand product) another supplier will be found and there are quite a number of suppliers that ... run a supply business not linked to brands. He said the role of private labels and the capacity of retailers to put pressure on suppliers, was amplified in Australia by the concentration of supermarket ownership.
The pain of the big cuts to private label prices is likely to have been shared between supermarkets and their suppliers, say market watchers.
Read more: http://www.smh.com.au/business/retail/supermarkets-slash-private-label-…
Follow us: @smh on Twitter | sydneymorningherald on Facebook
This was not an unknown known.... watchers will recall from 2 1/2 years ago..
http://www.brw.com.au/p/marketing/fonterra_sacrifices_brands_to_survive…
Australia, and specifically the fact that our supermarkets are tightening their grip across key categories such as dairy.
The squeezing mechanism is a cyclical one, which involves four simple steps.
First: The supermarkets introduce their own private label lines, priced lower than the branded competition.
Second: That means less shelf space for manufacturers’ brands, putting even more price pressure on an increasingly desperate set of suppliers.
Third: As more private labels are introduced, the consumer becomes increasingly familiar with the range, and the proportion of these products in their basket increases.
Fourth: Most manufacturers begin to supply private labels for the supermarkets – effectively becoming their own competitor. More private labels enter the market and the vicious cycle starts again.
The frightening news for suppliers such as Fonterra is that while they might already be feeling the pain, it’s really only just begun. Most analysts put the proportion of private-label grocery sales in Australia to be at about 25 per cent of total sales. That might seem steep, given Australia had hardly any store brands just over a decade ago, but we still have a very long way to go. In Germany and the UK, private-label penetration exceeds 50 per cent of grocery sales and nothing in the Australian shopper data suggests that we won’t eventually reach that same level. A Nielsen study recently confirmed that private labels have already penetrated 95 per cent of Australian households and most consumers perceive them to be at least as good as their branded rivals.
With a different slice of the China egg - good to 2 months ago la.
- and a mass of stats...
page 10-11
We expect dairy demand in China will continue to be satisfied by a mix of both domestic and imported products. As such, local raw milk prices, to a certain extent, would still be highly affected by prices of imported milk powder. Despite this, domestic prices are likely to remain at a premium over international prices (given cost differences).
And we do not expect imports to replace domestic raw milk production, as
(i) there are products, such as those labeled as pure milk and pasteurised milk, which can only be produced from raw milk, and not milk powder [surely not];
(ii) it is in the downstream producers’ interest to have a steady source of local raw milk to ensure a consistent supply [the value of long term ss arrangements v spot arrangements];
(iii) following the melamine incident in 2008, the government is encouraging the development of an integrated dairy supply chain, which is a necessity in order to ensure food safety [confirmed by policy noted above].
https://www.dbs.com.sg/treasures/aics/GenericArticle.page?dcrPath=templ…
- click thru to download the research
- Fonterra marked as the 6th largest farmer in the country.
Chinawise WMP also stands for wealth management product...
Daking [kang] New Zealand Farm Group and Pinny Farms said the sale and purchase agreement for seven dairy and three support farms had been cancelled.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=115…
http://www.stuff.co.nz/business/industries/72904559/oio-to-be-questione…
Unless we are mistaken we couldn't see Dakang included in the D20 group. The group described as:
The "D20" summit was attended by Chinese companies who are expected to form the industry's core: Yili, Mengniu, Modern Dairy, Guangming (Bright), Liaoning Huishan Dairy, Shengmu, Sanyuan Foods, Zhongken Dairy, Wandashan, Shijiazhuang Junlebao, New Hope Dairy Holdings, Heilongjiang Feihe (Firmus), Beingmate, Nanjing Weigang, Tianjin Jialihe Muye, Xinjiang West Region Spring, Fujian Changfu, Henan Huahua Niu, Jinan Jiabao Milk, and Xi’an Yinqiao (Silver Bridge).
maybe off frying other fish:
A CHINESE real estate, infrastructure and agriculture conglomerate could become the biggest owner of farmland in Australia. Shanghai's PengXin Group is bidding for two huge companies that are being sold separately - Consolidated Pastoral Company and S. Kidman & Co. Buying both could cost more than $1 billion, sources said, and allow PengXin to create a cattle powerhouse that would own more than 1 per cent of the Australian continent.
http://www.farmweekly.com.au/news/agriculture/cattle/beef/china-firm-ma…
up the Gold Coast somewhere
The 75-year-old doyen of the Ray White Group, Brian White, says there was no doubt the Chinese influence was growing.“Lots of Chinese are approaching us to buy land for primary production,” he said......
The White family has been selling real estate for 110 years and the family name is opening doors in China. Suki Fei of Ray White in Victoria said real estate agents were not respected in China because “deals are done under the table, so they are suspicious when they come to Australia”. “But they respect the Ray White family, so we talk about its legacy.” Ray White Rural chairman Paul White said it was an exciting time to be in the agricultural sector
http://www.goldcoastbulletin.com.au/realestate/chinese-investors-eyeing…
Well a chapter closes. Its over.
Dairy investors John Penno and Juliet Maclean are selling out of Chinese-controlled Purata Farms, the Canterbury corporate they founded 15 years ago as Synlait Farms. In May, Maclean said she was leaving the company, as farms manager, director and shareholder. Penno would be doing the same, she said. Maclean said she unhappy that Shanghai Pengxin was not willing to buy more farms to develop the business.
On Monday she said that position had not changed and a "pretty straightforward" exit provision in the Purata shareholder agreement had been "instigated".
http://i.stuff.co.nz/business/72930773/Kiwi-shareholders-sell-out-of-Sh…
Maybe not the way they'd all first thought it could close. It took bottle to do it in the public eye. But the generous lenders probably meant it to be.
Q: if you had time over, would it be same again?
Stop Press:
Herman Shao-ming Hu and Kenny Zhang are finalising the purchase of a majority interest in the 190-year-old Van Diemen’s Land Company (VDL) in Tasmania. The near-completed deal comes in the same week as federal parliament prepares to debate the Chinese-Australia free-trade agreement, and will be a test of Treasurer Scott Morrison’s attitude to foreign investment.
Mr Hu and Mr Zhang through their respective companies, Ryoden Development and the Australia-registered Waratah Corporation, will each buy about 35 per cent of VDL from current owner New Zealand’s New Plymouth Council. The other third of Australia’s biggest single milk producer is set to be bought by the Lempriere Capital equity managers, linked to the Melbourne-based Lempriere family, noted wool traders.
They believe foods grown and produced from Tasmania, and potentially marketed under a special new brand highlighting VDL’s centrepiece station Woolnorth as the location of the world’s cleanest air and water at Cape Grim, will sell particularly well in China.
http://www.weeklytimesnow.com.au/agribusiness/dairy/chinese-buy-nations…
and:
There are also hopes other Chinese investors may now invest in Tasmania’s ageing container port at Launceston or at Burnie — as well as in direct shipping services between Tasmania and China.
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