They would have to go back to November 7 for the last fall in the market.
Since then dairy prices have picked up, recording a 2.3% overall gain for nearly 25,000 tonnes of product sold at the last GDT event on January 16. The average price has risen to about $5690 — just under $US3500.
The key ingredient of wholemilk powder increased 1.7% to about $5460 ($US3353), while the sharpest rise were reserved for anhydrous milk fat, up 4.3% to about $9520 ($US5842), and butter, up 5.8% to about $9620 ($US5906). Mozzarella was down by 3.3% for the only loss, while there were no results for butter milk powder.
Milk prices had been on a steady slide, apart from a few false starts, since March 2022, until picking up last September.
Whether this will have a bearing on Fonterra’s payout forecast — sitting at a range of $7 to $8 a kilogram of milksolids for a $7.50/kg midpoint, and below the past two seasons — remains to be seen.
Federated Farmers dairy vice-chairman Karl Dean said a few more auctions were in the calendar before Fonterra was due to put out its next milk price forecast, which is usually done at the end of its quarter-year.
"It’s a bit of a game of wait and see at the moment," Mr Dean said.
"It could come crashing back down, and the companies have not put up the price just yet, so their confidence isn’t just there yet either. Hopefully that will change shortly, but for the time being we’ll just see if there are a few more auctions that go a bit more positively."
"But our forecast payouts are still $7.50/kg, and last year we sat at $8.20/kg, so we are still 70cents behind —so that’s 10%.
"I don’t believe we are going to see 10% greater production in New Zealand, and we might see 2% to 3% more if we are lucky.
"The payouts are going to need to go up quite a bit to get above the cost of production."
Mr Dean said most farmers were having a good season.
"Most people have had rain and if we look at a nationwide scale, the North Island has had good rain this summer and it’s definitely not the drought levels expected. Southland ... and Canterbury are doing pretty well and of course everyone is irrigating like crazy.
"I think milk production as a whole will be probably up for most of the country, which may be why none of the companies have put their prices up until they actually update their forecasts for production.
"If we increase production that normally brings the price down, so that might be a factor."
Extra milk will have to go into the auction. The better growing season than expected has run contrary to long-range forecasts for drier weather.
Mr Dean said farmers were still dealing with high costs.
"I don’t think fertiliser has come back as much as hoped, and urea is still $850 to $900 a tonne or something like that, so it’s still relatively high and definitely not at the lows of the last low payout.
"Fuel has come back, but for how long? You never know, it just takes one crisis for it to go back up above $2 a litre. "Unfortunately the costs for everything haven’t come back, and labour definitely hasn’t. When the cost of living’s high the labour wants more money, and deservedly so."
The market is back for cull cows to increase income.
Mr Dean said beef returns were holding up better than lamb prices, with the bull price at a reasonable level of about $5.40/kg.
The cull cow market was on its "downward slide" at below $4/kg and down about $1/kg from a year to 18 months ago.
"Most dairy farmers have been dry until now and probably did most of their culls when they scanned.
"With the weather and the grass growth that a lot of the North Island has been having, they’ve probably got no reason to send culls off yet, and they will probably hang on to them for another month or two. If that happens, the meat processors might put the price up to lure a few people, so it all has to play out."
On the flip side, if farmers held on to their cull stock for too long the price would drop, he said.
He said the late January rain had been timely.
Hopefully an "excellent" growing season for much of the country would result in good mating performances, while farmers had plenty of supplementary feed.
"It’s been a pretty good season actually — if the payout was really good, it would be a record breaker. Maybe another time it will line up perfectly."
The next GDT event is on February 6.
