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TheDairySite Newsletter - 08 May 2015

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Friday 8th May 2015.
Michael Priestley - Editor

Michael Priestley

MSD Animal Health

Novus International

New Zealand Needs Tactics for Tight Times

Dairy farmers across New Zealand are cautious about difficult times continuing following recent results on world auctions.

Tuesday’s latest global dairy trade result saw a further 3.5 per cent drop in the price index, bringing it to a five and half year more

This should be cause for concern, according to milk market economists at Dairy New Zealand, who are calling on farmers to tighten belts.

As part of the levy board’s initiative Tactics for Tight Times, analysts Matthew Newman and Zach Mounsey say that, if next year’s payout is below NZ$6 per kilo of milk solids, major decisions will have to be taken.

Tumbling dairy prices have led farmers to dry off earlier, milk once a day and cull early to ease costs. However, if prices remain depressed, ‘core operating expenditure’ will need cutting in 2015/16 to avoid debt escalation.

“This will require difficult on-farm management decisions,” they warned.

“Farmers who are proactive rather than reactive will be better equipped to approach the volatile fluctuations in milk price.”

Managing cash flow into 2015/16 will be key as retrospective payments are slated at a third of the previous season.

High retrospective payments from the 2013/14 season have made cashflow ‘manageable’ recently, but this lifebouy is set to reduce to below 50 cents from $1.50. 

Among bearish factors are Russia’s import ban, the potential for European output to react to quota abolition and unrelenting US supply, barring drought-weary California.

Of the European countries, New Zealanders have been told that Ireland, Denmark, France, Germany and the Netherlands all target higher production by 2020.

Oil prices were also flagged, with a reference to a Forbes analyst who rejected a higher oil price this year.

One major unknown continues to be Chinese demand, although the Dairy New Zealand article said milk powder stocks should have worked through.

Some reports are in agreement, saying China has returned to the market. This follows faltering domestic production as cows numbers drop under the low price of milk.

“Reduced cow numbers and lower milk prices will constrain milk production in China over the next couple of years, creating a larger supply gap and adding to the requirement for imported powder,” said the DairyNZ analysts.

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This Week's Articles and Analysis

Milk Quotas and Beef Herd: What Will the Effect of Quota Abolition Be?
Many are questioning what role the dairy herd will play in the beef herd going forward as many dairies look to expand after 30 years of quota restriction.

Best Practice in Calf Rearing
Calf rearing, Australians have been told, is like a jigsaw, with many vital elements all fitting together in balance.

Cheese is Surprisingly Healthy
Why can the French eat a traditionally unhealthy diet and still have a relatively low level of cardiovascular disease? Scientists from Aarhus University have found the secret lies with cheese.

Fluffy Cows: Getting Behind the Internet Sensation
Pictures of pampered cattle went viral on the internet last year. A science student and beef ambassador explains they aren't a particular breed, they've just been given special attention.

Market Reports

Animal Feed Statistics for Great Britain - March 2015
USDA Dairy Products Sales Report - 7 May 2015
USDA Dairy Products - 6 May 2015
USDA Agricultural Prices - 1 May 2015
Dairy Australia - Market News - 1 May 2015

Global Dairy Industry News


French Government Gives Aid Package for Cattle Sector


Price of Chinese Farm Produce Drops Slightly
Slight Drop in Average Price of Chinese Farm Produce

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Animal Welfare Amendment Bill Passes Final Reading
New Tools in Methane Battle
Ewe Milk Could Be 'New Frontier' for New Zealand


World’s Biggest Milk Producer Aims to Double Output
Indian Dairy Welfare Code Reaches Local Level

   United States

Novus to Sponsor International Food, Agribusiness Management Association Conference
Yamaha Celebrates Manufacturing 3 Million Units in USA
USDA Report Shows Little Economic Benefit to COOL
CME: Livestock Futures Rebounding After Last Week's Falls
Seasonality of Milk Production: Does Size Matter?


Mexico Closer to Chinese Dairy Deal
Mexico Shakes Up Dairy Sector to Reduce Import Need

   United Kingdom

Volatility Takes its Toll on UK Farm Profitability
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Dairy Industry Boosts Energy Efficiency
First Milk to Axe 70 Jobs in Turnaround Plan
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Huge Livestock, Crop Losses Expected After Nepal Earthquake


World Dairy Prices in Six Year Slump Despite Chinese Uptake


Robot Cow Herders Offer Opportunity for Milking Robots


Suspected Anthrax in Norwegian Cattle

   Saudi Arabia

Lumpy Skin Disease Found in Saudi Arabia


Farmers Reminded of Electricity Danger


Somali Livestock Exports Reach Record 5million


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