Milk powder sale brings note of caution
August 10th, 2009
Analysts and farmers alike are quick to warn against taking too much from the 26% jump in prices at this month’s online milk powder auction, the highest recorded on the Fonterra platform since November. ANZ National Bank rural economist Kevin Wilson says “it’s very encouraging to see the lift, but the market was very short on inventories and there’s still instability.” Still, broader measures suggest there’s room for optimism on the outlook. The ANZ Commodity Price Index shows dairy prices climbed 0.6% last month, beef prices rose 1.4% and wool gained 0.8%.
The CBA NZ Commodity Price indexes shows US dollar dairy prices gained 1.4% in the final week of July, while the sheep/beef index rose 1.1%. The Reuters Jefferies CRB index, a measure of 19 commodities traded globally, has reached its highest levels this year. Reserve Bank of Australia Governor Glenn Stevens says the economy of NZ’s biggest export market is “stronger than expected a few months ago,” having skirted a technical recession on accelerating growth in China, which has stoked exports.
Now, Meat & Wool NZ is predicting a bumper season for lambs, with the spring lamb output forecast to be 500,000 more than last year’s. The increase won’t all flow into processing though, with many farmers now seeking to build up flocks which dwindled through last year’s drought.
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