The Weekly Dairy Report: Fonterra lifts predicted payout with market lift, as farmers redo budgets and plan future carefully ahead

Niwa shows that in the last 15 days, regular rainfall has improved the soil moisture levels considerably. Managers are now looking for more sunshine to stimulate grass growth and replenish supplementary feed reserves.

Feed supplies look good in many areas of the nation and sown winter feed crops have struck well in the south, improving the chances of achieving a productive yield.

The latest DCANZ production figures indicate September milk flows are slightly ahead of last year, but reports out of the Waikato suggest that province could be 10% down due to the big spring wet.

Dairy advisers suggest pastures are starting to change into summer mode, and with seed head arriving, short residuals are important before rotation lengths start growing.

They also advise regular checking of young replacement heifers is necessary to ensure target weights are being met and health status is maintained.

More positive news at the global dairytrade auction as the index lifts by 4.5% and whole milk powder sells at levels not seen since 2014.

The biggest driver for this rise is the shortage of global supply as the lower prices have stunted production and with continued demand out of China buyers are keen to purchase early.

Fonterra responded to this positive market news by lifting the forecast to $6/kg ms, and reported that their revenue in the first quarter was up by 6%.

Farmers will be able to reset their budgets and look at how much debt will be repaid and deferred maintainence achieved this autumn.

Most North Canterbury farmers are now achieving milk collection after the earthquake, but those dairy farming in the Kaikoura region remain cut off.

The Government has organised an aid package for all businesses affected by this disaster but it will be many years of hard work before things return to normal, as many rural people have offered assistance to those of need.

It will be interesting to see if this price upturn brings more dairy real estate onto the market, what demand there is from farmers, at what price and what support the banking sector will give to new entrants.