Fuel dampens dairy gains

Strengthening export dairy prices have underpinned an annual 4.1% gain in producer output prices, which was dampened by increased imported fuel prices.

Earlier this week, Fonterra’s last global dairy trade auction for the current season posted its fifth consecutive gain.

Statistics New Zealand business prices manager Sarah Williams said for the year to March quarter, producer output prices had increased 4.1% while input prices increased 4.2%.

"The prices paid by fuel manufacturers were up 43% in the year, mainly due to higher crude oil prices," she said.

Otago Chamber of Commerce chief executive Dougal McGowan said the fuel prices were "hammered" during the period, creating more costs for the primary sector in general.

Analysts are now picking new-season dairy price forecasts will be in a $6.20-$6.30 range.

"This is giving some assurance to farmers that things are going in the right direction," he said.

He said with dairy prices trending up for the past nine months and milk production more settled in New Zealand and overseas, there should be less volatility in prices than in the past.

Ms Williams said the prices received by dairy cattle farmers and dairy product manufacturers in the year to  March rose respectively 49% and 22%.

She noted farm-gate milk prices had increased from $3.90 to $6.00 per kilo of milk solids and the dairy manufacturers had received higher prices for milk powder.


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