Last night’s globalDairyTrade auction resulted in a lift in the whole milk price to $US2301 per tonne – an increase of 25.8%
That’s a very welcome change to the downward trend since March but Fonterra chair Henry Van der Hayden isn’t breaking out the champagne yet.
In an email to farmers he says while it’s great to see the lift, it’s difficult to know where the market’s going.
The dollar which is trading above 65 cents continues to cause concern and the US has increased its support price for skim milk by 15%.
The next globalDairyTrade auction is scheduled for September 1.
UPDATE: Bernard Hickey notes the improved price has taken the dollar over 67 US cents.
Sigh.
I know a weak currency isn’t necessarily a good thing but Hickey points out the rise in the value of the dollar will cancel out some of the gains from the better auction price.
[…] at Homepaddock, as usual, was quickly on to this news and has a bit more to say on the matter with a post headed Phew – milk auction price up 25.8% (which is slightly at odds with the Radio […]
[…] Homepaddock links to the following graph. Here is the graph from the previous […]
I wish the rural sector would get used to the term “auction”. Worrying about ups and downs is going to drive them nuts.
The dollar is poking the industry presently more than the ups and downs of milk prices.
CK is correct – I was told ten months ago by what I would consider to be a more than a little astute follower of the global scene that the NZ dollar would go to parity with the US and then farmers
would know the day of reckoning.
He pleaded for farmers to stop borrowing and to make sure that they understood the consequences if they continued down this path. They will lose their farms.