The Weekly Dairy Report: Good start to spring on the farm but the milk market must maintain its momentum

The country survived last week’s spring storm without too many reported stock casualties, as nature again reminded farmers who is in control.

The signs of spring are plentiful but the dry region still lags behind in soil moisture levels, and managers will be planning ahead with that in mind.

Soil temperatures are lifting and urea applications will now be kicking grass growth into gear, and milk flows are building.

Balance day nears in many rotations up north but managers are urged not to go any quicker than 21 days as growth rates in the warmer areas begin to build to surpluses.

South Island farms are now well through their calving and apart from the odd cold snap have had a good weather run and most should have little problem ensuring good BCS are able to be achieved by mating.

Monitoring of R2 heifers will give farmers an update on how they are tracking as mating looms, as after heavy culling every animal must perform in the herds replacements.

More optimism in the milk market when last week’s auction delivered another strong lift, which have now totaled nearly 30% in the last 3 events.

Analysts suggest the price correction may be largely complete, and predict a future period of consolidation with only low supply forecasts likely to drive further rises.

Others warn that the market fundamentals have not changed significantly, with oil prices still low, no signs from China of impending shortages and the high NZD still impeding farmgate returns, so managers should be very cautious on spending decisions for a while yet.

Some news from China suggests that this country has been suffering from hot dry weather, which may restrict domestic milk flows and increase the possibility that they may again start increasing their importing of milk products.

Open Country Cheese lifted it’s payout to $4.60-$4.90 in line with it’s competitors, but did warn farmers the recent rises maybe just a market blip.

Bank lending to the dairy sector has increased to $40 billion and now sits at 66% of the total rural debt and while the increase is slowing a percentage of farms are still under considerable financial pressure.

Northland also looks at a major irrigation project as planners look to utilise plentiful rainfall at certain times of year for storage to utilise when things are dry.

Funding has been received for the next stage of the Hurunui Water Project and the development is underway in an area still desperately dry.

The project has been developed as a low density scheme with most farmers only committing to irrigating 25-35% of their properties, but this amount of water will enable them to significantly improve the profitability of their dry land systems.