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November 2016 Dairy Farming Update

Wednesday, 30 November 2016 at 12:39pm

A decent amount of rain in October helped improve soil moisture levels in the Canterbury region.  This regular rain and mild conditions has also resulted in good pasture growth rates.  Weather forecasters suggest we are moving into a La Nina phase.


Nationally milk flows are well back and with Fonterra reducing volumes at auction this had a positive effect on prices.  Throughout November dairy commodity prices continued their upward trend, with lower milk flows out of Europe and Australia also helping the market.  


The beginning of November saw Whole Milk Powder (WMP) prices lift to US$3317, prices not seen since 2014.  The banks suggested a forecast of $6/kg ms was a possibility and in mid-November Fonterra increased its 2016-17 forecast farm-gate milk price from $5.25 to $6 per kilogram of milk solids, with the forecast earnings per share in a 50c-60c range, taking the total payout to $6.50-$6.60, before retentions. This was a great confidence boost to the dairy industry in New Zealand.


Fonterra also delivered its first-quarter update, with revenue up 6% to $3.8billion, sales volumes up 2% to 4.9billion litres liquid milk equivalent and the gross margin unchanged at 22%.