Dairy faces narrowing margins towards the end of the coming season, with input costs rising and global dairy prices easing, NZX dairy analyst Rosalind Crickett says.
PKE has risen 25% to 30%, trading at $306 a tonne at Fieldays last year, $384 this year, and about $430 a tonne through the major ports. Fertiliser is up 30% to 40%, and fuel costs are climbing.
“Everyone’s been talking about freight, fuel, fertiliser and feed all rising, and that’s going to increase the cost of production,” she says.
NZX’s own milk price calculator dropped 38 cents, from $9.75 to $9.38.
“There’s definitely a softening, but volumes are set to seasonally increase from here on out until October.
“Everyone’s talking about the impacts of La Niña, and we did get some La Niña conditions, but they weren’t as strong this season as perhaps they were initially thought to be.”
A dry start to winter has pushed moisture levels down, especially in the South Island, with the North Island closer to normal.
“We saw both a record production of 4.5% up on the last season and 4.1% on the previous record, which was actually set during the 2020 and 2021 season.”
Full-season milk solids reached more than 2.02 billion, with May up about 5% year-on-year.
“We’ve seen a lift in cow numbers, a lift in cow productivity as well.
She says strong global commodity prices and last year’s $10.15 final payout drove the gains, with some operations converting or expanding into dairy.
“The market for the last few months has literally been described as illiquid.
“No one’s really buying, no one’s really selling either.”
She says buyers are waiting until July once calving prompts farmers to restock on feed.
Imported grain costs have risen sharply, and arable farmers are facing a tough run. Canterbury yields are down after a dry spring and wet harvest, and milling wheat quality has fallen.
“The cost of importing grain has put the cost effectiveness of supplementary feed more in favour of wheat and barley.”
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