Speakers in a NZX Virtual Global Dairy Seminar last week differed as to how these major influences would impact world prices.
Chicago-based StoneX director Nate Donnay says prices for whole milk powder had held up better than expected around US$3000/tonne.
But he expected them to fall to $2750 in the first quarter of 2021, followed by a recovery to $3100-$3200 in Q2 and Q3.
Monica Ganley, the principal of Quarterra in Buenos Aires, Argentina, expected price weakness in the short-term followed by milk production declines next year because of La Nina, leading to higher prices for powders.
NZX analyst Amy Castleton says slightly drier weather in the upper North Island and the looming La Nina would restrict New Zealand’s milk production and hold prices around $3000. Adding the slower pace of Chinese buying would depress prices during 2021.
Donnay says the $1 billion US government buying of dairy products, especially cheese, to distribute in schools and to needy people in the covid-19 disruption, was due to end in October.
If the Democrats prevailed in the US election then he did not think the Foodbox programme would be renewed, but rather a more personalised, targeted welfare card system.
“We estimate Foodbox has taken 2-3% of all dairy solids and that has been a big boost in cheese prices,” he said.
He ruled out a boost in farm payments because he says dairy margins didn’t justify that approach at present.
Castleton says a La Nina weather pattern would exacerbate already dry conditions in the upper North Island and Canterbury, but with a $6/kg milk price farmers would make or buy in supplementary feed to keep production level.
“We don’t expect any drop in production, but the earlier prediction of an increase may not eventuate,” he said.
