In its Situation and Outlook for Primary Industries Mid Year Update – December 2014 the Ministry has revised its milk production forecast to +3% for both the 2014-15 and 2015-16 seasons. The forecast assumes "normal climatic conditions, and continued increases in cows numbers and on-farm productivity". The report makes no reference to whether the low farmgate milk price will impact milk production.
Source: MPI
Dairy export revenue is forecast to drop by 23.5% in the 2014-15 season to $13.8 billion. MPI has identified that a 10c fall in the farmgate milk price will decrease farmgate revenue in the Waikato by $46 million.
MPI has revised its farmgate milk price forecast for the current season to $4.82/kg milksolids (kgMS). This compares to Fonterra's current milk price forecast of $4.70/kgMS and the AgriHQ milk price forecast of $4.20/kgMS.
Dairy commodity prices are expected to begin to increase in the first half of 2015. "We expect international dairy prices to remain low in 2014-15, with a gradual recovery from the first half of 2015 as growth in demand shifts to exceed supply in key markets".
"We expect that the stockpiles [of dairy products] will be used in the March 2015 quarter, and that this will result in increased demand and some correction in global prices from the June 2015 quarter".
Situation and Outlook for Primary Industries Mid Year Update – December 2014
