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May 2016 New Zealand Dairy Farm Investment Update

Tuesday, 31 May 2016 at 12:17pm

The big news in this update is the announcement by Fonterra of a new auction system to complement the Global Dairy Trade Auction.  This trading platform covers the large range of dairy products available and is open 24 hours a day 7 days a week.  This new platform is called GDT Marketplace, the original auction will now be known as GDT Events. Fonterra’s managing director of global ingredients, Kelvin Wickham, said “The new GDT Marketplace provided an additional sales channel for NZMP ingredients and met growing demand in the dairy market for online business-to-business transactions”.

We saw a small lift in the Global Dairy Auction in April, with a 7% lift in Whole Milk Prices in the April 19th GDT auction.  May only saw slight increases in milk commodities price.  Even though demand seems to be growing, New Zealand is still waiting for global supplies to reduce and China to increase imports before we see some better prices.

Fonterra announced another early dividend payout of 10cents to be paid on June 7th to assist farmers experiencing cash-flow problems.

Temperatures stayed fairly mild through the beginning of April, which meant good grass growth rates for the North Island and much of the South.  However, this growth rate plummeted at the end of April due to the dryer conditions in some areas in the South Island.  The end of this month has seen rain relief for many dry areas.

Early dry off for many low producing cows occurred, to protect next seasons’ production.  By the middle of May northern herds were on winter grazing rotations while many Southland managers made the most of mild weather conditions and abundant grass to squeeze more production out of cows before being dried off.