Ipredict has a 95% probability of a September 20 election.
I have no inside knowledge on this, but the sooner, the better for me.
The probability National will lead the next government after this year’s election – now likely to be in October – has passed 60% for the first time. The Act Party has gained at the expense of the Conservatives while John Key’s other support parties, UnitedFuture and the Maori Party, have improved their prospects of returning to parliament, as has Mana. . .
A party vote turnout of 77.2% continues to be expected compared with 74.2% in 2011.
There have been small changes in forecast party vote shares over the last week. Of the major parties, National is expected to win 42.26% of the party vote (down from 43.06% last week), Labour 32.94% (down from 33.17%) and the Green Party 9.42% (down from 9.59%).
No other parties are expected to reach the 5% threshold under the MMP electoral system. NZ First is expected to win 4.73% of the party vote (compared with 4.40% last week), the ConservativeParty 4.14% (down from 4.40%), Act 2.46% (up from 1.70%), the Maori Party 1.28% (down from 1.30%), the Internet Party 1.28%, Mana 0.49% (down from 0.60%), UnitedFuture 0.49% (down from 0.60%), the Aotearoa Legalise Cannabis Party 0.30% (down from 0.40%), the Civilian Party 0.1% and Democrats for Social Credit 0.1%.
This isn’t an opinion poll but even so I’m not sure why Act, a supposedly liberal party, should gain at the expense of a party Conservative in name and by nature.
iPredict’s first update for the year is predicting a very narrow win for the incumbent government.
• Election expected in Q4 2014, most probably in November
• Growing economy expected, but with rising interest rates
• Only National, Labour and Greens to reach 5% threshold
• Maori, Conservative, Mana and UnitedFuture parties to win electorate seats but Act to miss out
• Very slight advantage to John Key as head of a National/Conservative/UnitedFuture government
This is the first iPredict Update for the 2014 New Zealand General Election with forecasts based on trading by the more than 7000 registered iPredict traders. As in 2011, the newsletter will be based on a market snapshot taken at a random time, initially weekly and then daily during the election campaign.
The first snapshot, which was taken at 9.32 am today, suggests a very slight advantage to incumbent prime minister John Key, most probably leading a National/Conservative/UnitedFuture government, with or without the Maori Party. . .
No other parties are expected to reach the 5% threshold under the MMP electoral system. The Conservative and NZ First parties are both expected to win 4.6% of the party vote, the Maori Party 1.5%, Act 1.3%, Mana 0.7%, UnitedFuture 0.6% and the Aotearoa Legalise Cannabis Party 0.3%.
Stocks for the proposed Civilian and Kim Dotcom parties will be launched in the near future.
Based on the party vote forecasts and the electorate results above, Parliament would be as follows: National 54 MPs, Labour 44 MPs, Greens 12 MPs, the Conservative Party 6 MPs, the Maori Party 2 MPs, UnitedFuture 1 MPs and Mana 1 MP, for a total of 120 MPs. A government would be required to have the support of 61 MPs on confidence and supply.
Under this scenario, National, the Conservative Party and UnitedFuture could form a government with 61 MPs. Were the Maori Party involved, such a government would be supported by 63 MPs.
Were the Conservative Party not to win an electorate seat, a Labour/Green/Maori Party/Mana government could be formed with 62 MPs.
Overall, the market indicates a very narrow advantage to National, with a 53.3% probability of a National prime minister after the next election and a 45.1% probability of a Labour prime minister. . .
I’d call that too close to call which is what most polls have been saying.
People wagering on iPredict are putting their money on a fall in Fonterra payouts for this season and the next one.
Forecasts for Fonterra’s 2011/12 and 2012/13 payouts have fallen following last night’s 10% plunge in prices on the company’s global dairy auction system.
According to the 6000 registered traders on New Zealand’s online predictions market, iPredict, the 2011/12 payout per kilogram of milk solids (before retentions) is now likely to be $674, down $0.07 from the $6.81 forecast when iPredict last reported on Monday.
The 2012/13 payout forecast has been harder hit, and is now just $6.14, down $0.35 or 5.4% from the $6.49 forecast on Monday.
Federated Farmers is also warning of a possible drop in the forecast price for next season:
World wide demand for milk products remains steady despite a 9.9 percent price index fall on the GlobalDairyTrade online market. Federated Farmers agrees with Fonterra this reflects the current abundance of milk being produced around the world.
“Almost ideal growing conditions around most of New Zealand this season has seen a record amount of milk production and a corresponding increase in products on the market platform,” Federated Farmers dairy chairperson Willy Leferink says.
“There is also more milk coming from the United States and Europe at the moment, meaning there is an abundance of milk products going through GlobalDairyTrade.
“This month alone there has been a 10 percent increase in volumes on the platform, so a price drop was not unexpected.
We will have to watch what happens over the next few months, but with Fonterra already having revised down it’s payout by 45 cents to $6.30 per kg of milk solids, New Zealand dairy farmers should begin preparing for a potentially lower milk price forecast for the 2012-13 season.
“However, the price of whole milk powder indicated by GlobalDairyTrade represents just one day on the market.
“This is a volatile market with many factors influencing it. One thing which could have a big effect on global dairy production over coming months is the very strong beef prices at the moment, which could sway production towards the meat rather than the dairy side of the equation.
“New Zealand’s dairy industry is very resilient and used dealing with small downturns while looking to the long term picture, which is very rosy indeed,” Mr Leferink concluded.
One price fall, even a 9.9% one, doesn’t mean we’re in for wintery market conditions, but it does show the need for caution with budgeting for the coming season.
It might also have a moderating influence on price rises for land, wages, supplies and services.
Quote of the day:
There are two very different theories on how Peters will conduct himself in the coming Parliament.
One is that he will spend the next three years rebuilding his somewhat tarnished reputation and seek to become the feisty elder statesman.
The other is that he will come out with all guns blazing seeking vengeance on those who he believes did him wrong. . .
. . . His performance in Parliament will be interesting.
Peters was a master of the use/misuse of Standing Orders (the rules of Parliament) to make has mark and in particular using points of order to make political points.
Those rules have changed a great deal in Peters three year absence, as has Lockwood Smith’s interpretation of them.
It is unlikely that Peters will agree with the changes and it is hard to imagine him keeping his displeasure to himself. Ian Llewellyn
Will he act with reason and decorum or won’t he?
Or should the question be not if he’ll act true to form but when?
Punters at iPredict reckon there’s a 52% probability Lockwood Smith or another presiding officer will throw Winston Peters out of the House of Representatives by 17 March 2012 and a 69% probability Mr Peters will be ordered to leave the House of Representatives by 31 March 2012
As the three Davids and assorted hangers-on strive to lead the Labour Party, iPredict suggests the winner might not get the ultimate prize:
After last night’s TVNZ debate, David Cunliffe is now favoured to be the next leader of the Labour Party, with 42% probability, followed by David Shearer and David Parker who are both on 31% probability.
But, while iPredict also gives Labour a slightly better chance of winning the next election (53% probability), Cunliffe isn’t the favourite to be Prime Minister:
David Shearer has a 23% probability of being Prime Minister by 1 January 2015, compared with Bill English (14%), David Cunliffe (13%) and David Parker (7%).
Labour’s leadership is only one of its problems.
Changing leaders won’t by itself solve the rest. It’s possible whoever wins this leadership battle could be a casualty of the inevitable fallout from the hard decisions that need to be taken and won’t be leader long enough to become Prime Minister.
iPredict was a reliable indicator of election results and its now predicting that National could lose an MP after special votes are counted.
That will make it a bit more difficult to pass legislation and increase the need for support from the Maori Party.
Other predictions are:
* Labour favoured for 2014 election, with National’s party vote forecast to fall
* Parker favoured for Labour Leader and new 2014 PM stocks launched
* Act, Maori Party and United Future leaders, and Bridges and Tremain, expected to be Ministers outside Cabinet
* Adams, Foss and Guy expected to be promoted to Cabinet
* English safe in Finance and Collins set to take Justice
* Brownlee’s hold on Economic Development and Energy & Resources less certain
* Tolley and Coleman to lose Education and Immigration
* Commerce up for grabs
iPredict’s stocks on the new Cabinet suggest that a 20-member Cabinet would consist (in order of probability) of:
1. Gerry Brownlee (100%)
2. John Key (99%)
3. Bill English (99%)
4. Steven Joyce (98%)
5. Tony Ryall (98%)
6. Christopher Finlayson (98%)
7. Paula Bennett (98%)
8. Judith Collins(98%)
9. Hekia Parata (98%)
10. Anne Tolley (98%)
11. Murray McCully (96%)
12. Tim Groser (96%)
13. Jonathan Coleman (95%)
14. Nick Smith (95%)
15. Amy Adams (93%)
16. Craig Foss (93%)
17. Kate Wilkinson (93%)
18. Nathan Guy (89%)
19. Phil Heatley (89%)
20. David Carter (89%)
* Ministers Outside Cabinet are expected to be (in order of probability):
1. Peter Dunne (92%)
2. Tariana Turia (91%)
3. Pita Sharples (90%)
4. John Banks (74%)
5. Simon Bridges (66%)
6. Chris Tremain (66%)
Someone with a better grasp of predictions markets than me might be able to explain why the PM and deputy aren’t absolute certainties for staying in cabinet.
I have no inside knowledge on who might or might not stay as or become a minister but I’d put the chances of all those in iPredict’s 20 who were ministers in the 2008-11 government at or near 100% too.
That doesn’t leave much room for promotions but stability was one of the words used often in campaigning so I’m not expecting much change.
One commentator (sorry, can’t find the link) wrote of the possibility of three whips and some under-secretaries which would be one way to promote more MPs without making cabinet bigger.
iPredict says its predictions market was a more accurate indication of election results than polls:
The Chief Executive of iPredict, Matt Burgess, has declared the performance of Victoria University’s online predictions market in forecasting the election result to have been “absolutely outstanding” and said refinements would be made to assure even greater accurate in 2014. Mr Burgess was commenting on iPredict’s initial post-election analysis which shows iPredict’s trading prices were closer to the final result than 41 of the 51 traditional opinion polls published in the eight months before election day.
The analysis also shows that, in the month before the election, iPredict forecast each of the National, Labour and Green party votes to within 1.5% of the final result. During that time, the average iPredict forecast of National’s party vote was 47.10% (0.89% less than won by National on Saturday), Labour 28.60% (1.47% more than the actual result) and 11.1% for the Greens (just 0.48% more than its 10.62% result).
Even more significantly, over the three months before election day, iPredict forecast National’s party vote to within an amazing 0.01% of its actual result, while overestimating Labour’s vote by just 1.67% and underestimating the Greens by just 0.42%.
This is a lot more credible than Horizon which is trying to spin its way out of the huge gap between its polling and the election results.
The accuracy of polls is one question, whether they not only reflect what peole are doing but lead them to do it is another.
An Otago University study shows:
. . . that people often take the ‘popular vote’ and go with the party that’s already seen as a success.
Michelle Nicol carried out the research and says the ‘bandwagon effect’ would have had a negative impact on ACT.
Had polls led to more confidence that John Banks would win Epsom Act might have got mroe votes but when his success was in doubt people were concerned that their votes would be wasted on a party that was unlikely to get any seats.
Most polls take an FPP approach to government, assuming the party with the most support will win the election and the right to govern.
Although the party with the most votes has been the one to lead governments in New Zealand since MMP was introduced that is no guarantee that one with less support won’t end up being able to cobble up a majority with several coalition partners.
National is still well ahead of Labour in all polls, but today’s update from iPredict shows potential coalition partner Act faltering in Epsom which is giving a slight boost to the horrifying possibility that we’ll get a Labour/GreenParty/Maori Party/ New Zealand First coalition.
Act’s chances in Epsom have dropped to marginal levels, making it just possible that Phil Goff could be our next Prime Minister, according to this week’s snapshot by New Zealand’s online prediction market, iPredict. With John Banks hovering at just over 50% chance of winning Epsom, and New Zealand First nearing MMP’s 5% threshold, a Phil Goff-led government isn’t out of the question . . .
Forecast party vote shares are now: National 45.0% (down from 46.0% last week) Labour 29.7% (down from 31.0% last week), the Greens
11.1% (steady), New Zealand First 4.7% (steady), Act 3.6% (up from 3.1% last week), UnitedFuture 1.9% (up from 1.6% last week), the Maori Party 1.2% (steady), the Mana Party 1.0% (down from 1.1% last week), the Conservative Party 0.9% (down from 1.0% last week), and the New Citizen Party 0.4% (down from 0.5% last week).
Based on this data, and the electorate results above, Parliament would be as follows: National 58 MPs, Labour 38 MPs, the Greens 14
MPs, Act 5 MPs, the Maori Party 3 MPs, UnitedFuture 2 MPs, and the Mana party just 1 MP. There would be 121 MPs, requiring a government to have the support of 61 MPs on confidence and supply. John Key’s National Party would be able to govern with any one of the Greens, Act or Maori Party.
Although Act often does better in elections than polls, the chances of it getting at least 5% are remote and the possibility of Banks not winning Epsom is increasing. If NZ First gets at least 5% and Banks loses Epsom the picture is gloomier:
Under this scenario, Parliament would be as follows: National 57 MPs, Labour 38 MPs, the Greens 14 MPs, New Zealand First 6 MPs, the Maori Party 3 MPs, UnitedFuture 2 MPs, and the Mana Party just 1 MP. There would be 121 MPs, requiring a government to have the support of 62 MPs on confidence and supply meaning Phil Goff’s Labour Party could govern with the Greens, New Zealand First and the Maori Party, and would not need the Mana Party.
There are only two silver small linings to this gloomy prospect.
The Mana Party wouldn’t have to be part of that coalition and the thought of such a government might help persuade people to vote for a change from MMP in the referendum on the voting system
Polls suggest that the status quo will be chosen by most people who vote in the referendum on MMP.
They also show the alternative which gets most support is FPP.
iPredict has the probability of retaining MMP varying from 70 – 90%.
But even if a majority vote for change in the referendum I don’t think FPP would stand a chance in the second referendum against MMP in 2014 and the chances of another system getting majority support aren’t high.
The majority of organisations registered with the Electoral Commission to campaign on the issue are supporters of MMP – including the Green and Labour parties and several unions.
Most people don’t know enough about the alternatives except FPP to be keen on one and there is no campaign – at least yet – for any other option.
Next month’s referendum will be the last chance to get a different electoral system for decades unless a majority vote for change. But unless there’s a lot more effort put into educating voters about the options and promoting an alternative to both MMP and FPP, we’re likely to be stuck with what we’ve got.
iPredict’s weekly update shows the grounding of the Rena has led to a weakening of support for National with increased support for Labour and the Green Party.
The Rena grounding has hurt National and helped Labour and the Greens, iPredict’s first weekly snapshot since the disaster suggests. According to the online predictions market with its 5000 registered traders, National’s forecast party vote has plunged from 50% last week to just 46% this week, potentially costing it five MPs compared with last week, while its Bay of Plenty MP, Tony Ryall, is now expected to suffer a reduced majority. Labour is up from 28.5% to 31.0%, which would give them 39 MPs, while the Greens are also big winners from the disaster, increasing their forecast party vote for the fifth week in a row to 11.1% which would deliver them 14 MPs.
The decline in support for potential coalition partners – Act, United Future and the Maori party, makes it likely National would have to do better than it did in 2008 to retain power. However iPredict is still forecasting the party would be able to govern with just one coalition partner.
Forecast party vote shares are now: National 46.0% (down from 50.0% last week) Labour 31.0% (up from 28.5% last week), the Greens 11.1% (up from 10.7% last week), New Zealand First 4.7% (up from 3.6% last week), Act 3.1% (down from 3.2% last week), UnitedFuture 1.6% (up from 1.1% last week), the Maori Party 1.2% (down from 1.4% last week), the Mana Party 1.1% (up from 1.0% last week), the Conservative Party 1.0% (up from 0.9% last week), and the New Citizen Party 0.5% (steady).
Based on this data, and the electorate results above, Parliament would be as follows: National 58 MPs, Labour 39 MPs, the Greens 14 MPs, Act 4 MPs, the Maori Party 3 MPs, UnitedFuture 2 MPs, and the Mana party just 1 MP. There would be 121 MPs, requiring a government to have the support of 61 MPs on confidence and supply. John Key’s National Party would be able to govern with any one of the Greens, Act or Maori Party.
Given New Zealand First’s proximity to MMP’s 5% threshold, iPredict has also analysed what might happen should New Zealand First win 5.0% of the vote. Under this scenario, Parliament would be as follows: National 56 MPs, Labour 37 MPs, the Greens 13 MPs, New Zealand First 6 MPs, Act 4 MPs, the Maori Party 3 MPs, UnitedFuture 2 MPs, and the Mana Party just 1 MP. There would be 122 MPs, requiring a government to have the support of 62 MPs on confidence and supply meaning John Key’s National Party would require the support of the Greens, or Act and one of the Maori or UnitedFuture parties.
Punters betting through Centrebet are still putting their money on a National win.
Money is continuing to come in hard for the National Party government to win the November 26 NZ election, bets in the last few hours include $10,000.00 and $3,000.00 at $1.11!
“It’s seemingly all one-way traffic now, with National into a hot $1.09 favourite, and embattled Labour out to $7.00,” Neil Evans said.
“This is obviously the biggest the Opposition has been since the head-to-head betting market was launched at the start of the year!”
Both Australian and NZ-based punters are taking the short odds on National, which now holds 92% of the stakes!
But there is still a month and a half until the election and as David Farrar pointed out in his Herald column events can undermine support for even a very popular government.
What John Key’s managed to do over these last three years in make National in a way New Zealand or at least New Zealand as it is seen by nearly two thirds it would now appear of the voters. And those who are in the other parties in a strange way are almost now out of that definition and that it is an absolutely fatal place for a political party to find itself in and it makes it extremely difficult both for the party and the party’s leader to get back in the race.
I think you’ve got to go back to that 2005 to 2008 period, the last term of Helen Clark’s government, when New Zealand really fell out of love with Labour. More and more people, even traditional Labour voters began to see Labour as not really representing them, whereas John Key’s performance really made him one of us, he’s our sort of guy, he really talks our language.
And that has just consolidated over the last three years to the point where it’s a flat line you know of National’s support and it’s you know about 20 percentage points above the flat line of Labour’s. . . it’s quite an achievement on National’s part . . . it’s almost as if he’s made Don Brash’s statement of 2005,mainstream New Zealand is National, which was wrong then but is right now. . .
You really do get the impression that New Zealanders have looked at Labour, decided a) they don’t really sound very much like us, like me; and b) they’re just not ready, look at them, they’re all over the place. . .
John Key’s personal popularity, an acceptance that National has had an unprecedented series of serious events outside its control to deal with and the Kiwi sense of giving a first-term government a fair go are all conspiring against Labour.
But its failure to learn from the lesson the electorate gave it in 2008, disunity and ill-discipline have turned off all but its hard core supporters.
They have less than eight weeks to persuade voters to trust them. But how can a couple of months of words turn around opinions based on several years of misguided and increasingly unpopular actions?
The outlook for Labour isn’t quite so bad on iPredict as it was in Sunday night’s polls.
This week’s snapshot from New Zealand’s online predictions market, iPredict, forecasts an election-night gap between National and Labour much narrower than that suggested by the average of this weekend’s TVNZ and TV3 polls. While the average of the TV polls suggests National will win 56.7% of the party vote and Labour 27.8% – a gap of 28.9% – iPredict is forecasting a National party vote of only 50.0%, with Labour winning 28.5%, a gap of just 21.5%. The Greens have built further on last week’s all-time iPredict high, with their forecast party vote reaching 10.7%.
The West Coast Tasman seat however, is worse for Labour:
In electorate contests, Labour’s electorate-only Damien O’Connor now risks leaving Parliament, with his chances in West Coast-Tasman deteriorating to just 45%. . .
. . . For the first time since March, National’s Chris Auchinvole is expected to retain the rugby league loving West Coast-Tasman (55% probability up from 47% last week). This follows media reports of attacks on prominent rugby league supporter Sir Peter Leitch (”The Mad Butcher”) by two Labour MPs.
That sorry episode started in social media where it might only have been seen by political tragics but was soon picked up by mainstream media where it had a much wider audience.
It happened after polling stopped but could have had an impact on the iPredict result.
One snapshot of a prediction market is no more reliable than a single poll and a small number of punts can make significant changes.
But a series of polls in combination with iPredict continue to show a very wide gap between National and Labour.
Storm clouds are gathering over international markets but Finance Minister Bill English has returned from the United States with a lesson for New Zealand:
“We mustn’t get psyched out by all of this. We have to hold steady, stick with our policy mix, put even more emphasis on sharpening our competitiveness to sell abroad.” NZ needs to do more work on supporting the export effort offshore. English told Trans Tasman “we are positioning ourselves to crank up that effort after the election.”
That’s a very simple recipe which requires National to be in government after the election.
There is a high probability of that but no certainty. The election is eight weeks from tomorrow and the opposition will spend it grasping any negative statistic to try to persuade voters to vote for a change.
However, successive polls and the latest update from iPredict suggest the public generally accepts that National has managed well in the face of an unprecedented series of natural and financial crises outside its control and are prepared to give the blue team a second term.
The high level of support is based on several factors, including the popularity of Prime Minister John Key.
Trans Tasman’s view is: While Key’s popularity is a phenomenon which will have a crucial influence in the election, voters have decided National are better economic managers, and they are convinced it’s not sensible to change direction in the middle of a global financial crisis.
Support for national is also helped by the lack of a viable alternative owing to Labour’s disunity and poor performance.
Another lesson for New Zealand is that a party which doesn’t manage to do a credible job of leading the opposition can’t be trusted to lead a government.
Several polls have been showing National attracting at least 50% support. For the first time iPredict is also pointing to national being able to govern alone.
A media release from iPredict says:
Following last week’s World Cup wobble, John Key’s National Government has recovered with its forecast party vote reaching a record reported high of 49.0%, this week’s snapshot from New Zealand’s prediction market, iPredict, suggests. Maori Party Co-Leader Dr Pita Sharples is now expected to retain Tamaki-Makaurau, although the gap with Labour’s Shane Jones remains narrow. Labour’s Trevor Mallard is expected to improve his majority in Hutt South while Labour’s Clare Curran is expected to reduce hers in Dunedin South. In economics, forecasts for inflation, the current account deficit, unemployment, the OCR and future Fonterra payouts have all fallen . . .
All current leaders of parliamentary parties have at least a 92% probability of remaining in their positions until the election. The most vulnerable remains Labour Party leader Phil Goff, but with the market forecasting just a 8% probability he will be replaced prior to the election (down from 9% last week). There is a 39% probability (up from 35% last week) that there will be changes to the top ten of Labour’s party list, announced on 10 April 2011, when it is registered with the Electoral Commission. . .
On a seat-by-seat basis, National is expected to win 40 electorate seats, Labour 24 (down from 25 last week), the Maori Party 3 (up from 2 last week), and Act, United Future and the Mana Party 1 seat each.
Party Vote, and Election Results
Forecast party vote shares are now: National 49.0% (up from 46.5% last week) Labour 30.2% (down from 31.4% last week), the Greens 8.0% (up from 7.9% last week), Act 4.1% (down from 4.4% last week), New Zealand First 4.0% (down from 4.5% last week), UnitedFuture 1.6% (up from 1.5% last week), the Maori Party 1.5% (steady), the Mana Party 1.0% (up from 0.9% last week), the Conservative Party 0.9% (steady), and the New Citizen Party 0.5% (up from 0.4% last week).
Based on this data, and the electorate results above, Parliament would be as follows: National 62 MPs, Labour 38 MPs, the Greens 10 MPs, Act 5 MPs, the Maori Party 3 MPs, UnitedFuture 2 MPs, and the Mana Party with just 1 MP. There would be 121 MPs, requiring a government to have the support of 61 MPs on confidence and supply, meaning John Key’s National Party would be able to govern alone.
Overall the market indicates a 94% probability there will be a National Prime Minister after the election (up from 93% last week).
People like me on the blue team can dream and the live update on electionresults.co.nz has a pretty picture.
But it’s still 2 1/2 months until election day.
The chances of National retaining its leadership of the government are good but it is very unlikely the party will keep enough support to govern alone when people actually vote.
Even if National did manage to get an outright majority, which rarely happened under First Past the Post and has never happened since we’ve had MMP, John Key has said he would seek to include other parties in government.
Former Green MP Sue Bradford has confirmed her candidacy in Waitakere.
This will help sitting MP and cabinet minister Paula Bennett by splitting the left vote.
The candidacy will get Bradford and her party some publicity and if Mana got sufficient party votes for a second MP, assuming its leader Hone Harawira keeps his seat, she might get in to parliament.
The iPredict contract gives Bennett a 74% chance of holding the seat.
The contract on Bradford being second on Mana’s list, after Harawira, hasn’t attracted much interest.
Fonterra has held its forecast payout at $7.15 – $7.25 per kilo of milk solids for the 2011/12 season in spite of uncertainty in global markets and a high dollar.
Chairman Sir Henry van der Heyden said the Board had reconfirmed the forecast against a background of significant volatility in global markets and foreign exchange rates.
Sir Henry said the recent fall in food commodity prices was largely anticipated when Fonterra announced its opening forecast for 2011/12.
“In volatile economic and market conditions, we could face a range of factors that may affect the season’s Milk Price. But at this very early stage of the season we see no reason to alter the forecast,” Sir Henry said.
“We will continue to monitor possible slowing global economic growth that might translate into weaker dairy demand.”
The final payout for the 2010/11 season will be announced later this month. It is expected to be at or close to the forecast of $8.00-$8.10 per kilo before retentions although iPredict has an 88% probability it will be higher than that.
The forecast is a valuable tool for farm budgeting and the company does its best to ensure it is as accurate as it can be given the difficulty of that with so many financial, political and climatic variables which can affect both demand and supply of milk all over the world.
However, the drop in payout from the forecast a couple of seasons ago was a reminder for farmers to budget conservatively and most have used this season’s higher returns to reduce debt.
Online predictions website iPredict launched it’s first contracts on Fonterra payouts today.
When I checked the website it was showing A 99% probability the 2010/11 payout will be more than $7.90 before detentions; a 98.3% probability the payout will be more than $8.00; a 69% probability it will be more than $8.10; an 18.7% chance it will top $8.20; and a 4.7% chance of more than $8.30.
The online predictions marketiPredict is launching stocks for five year forecasts of Fonterra payouts:
Draft stocks are currently available at https://www.ipredict.co.nz/forum/read.php?4,13546,13546#msg-13546 to enable traders to review and comment on their fine-print prior to the formal launch. Dairy farmers and other dairy industry experts are also encouraged to comment and trade.
“Fonterra is New Zealand’s most important company, responsible for around a quarter of our exports and around 7% of GDP,” iPredict CEO Matt Burgess said today.
“Until now, the only source of rigorous data about the company’s future payout to farmers has been the company itself, and then usually with only a two-year horizon.
There’s a very good reason for that – an open market for primary produce is very volatile.
There are so many variables which affect supply and demand it is extremely difficult to predict very far into the future with any degree of certainty.
Who knows what the exchange rate will do, what the weather will be like here and where our competitors are, how much fuel and fertiliser will cost, what decisions politicians might make which affect production and price . . .?
“With iPredict’s new stocks, dairy farmers, the wider industry, economists, banks, the government and everyone with an interest in New Zealand’s medium-term economic prospects, will be able to obtain free snapshot information on how the company is likely to perform, in terms of payout, for the next five years.”
Mr Burgess said the stocks would be based on Fonterra’s final payout, per kilogram of milk solids, to a 100 percent share-backed farmer (before retentions), for the five financial years from and including 2010/11.
“Currently, Fonterra is forecasting a payout in the range of $8.00 to $8.10 for 2010/11 and $7.15 to $7.25 for 2011/12. The iPredict stocks will provide farmers and everyone else with an independent assessment of the forecast payout.”
Mr Burgess said the iPredict forecasts for the three further out-years would be more indicative but would give a general indication of the likely performance of the company.
“iPredict produces consensus views on the likelihood of future events, based on the theory of the ‘wisdom of crowds’. This holds that where people pool their perspectives and knowledge about a future event, their opinion is likely to be accurate,” he said.
iPredict’s binary contracts of political and economic events had an accuracy rate of 88%, he said.
Predictions markets like iPredict are mainstream throughout the world, with the most prominent being http://www.Intrade.com in the United States. iPredict operates in New Zealand with authorisation of the New Zealand Financial Markets Authority. The company is owned by Victoria University of Wellington.
It will be very interesting to follow this but I suspect most punters will be from outside the industry.
Insiders find farming itself is enough of a gamble, without the added excitement of prediction markets.
Remember the sanctimonious comments about National and Act doing post-election deals over some electorates?
The Greens aren’t going that far in Waitaki but their candidate, Sue Coutts, has made it clear she’s running a Clayton’s campaign for the electorate vote:
The focus for all Greens candidates was getting support for the party vote, Mrs Coutts said. “Getting the party vote is the way the party is going to get ahead.” Winning the electorate was not the priority “this time around”.
Getting the party vote is the way every party will get ahead becuase, as we were reminded yet again at National’s conference last weekend, it’s the party vote that counts.
However, while winning seats doesn’t help a part get into government, it is still something that National takes seriously.
Labour is still trying to win city seats but like the wee parties, it’s making little effort in most provincial seats and in Waitaki it too appears to be running a Clayton’s campaign.
Jacqui Dean comprehensively won the seat for National at the last election and is working very hard to earn the electorate’s support in this one.
iPredict gives her a 92.5% probability of doing that in contrast to a .5% chance for the Labour candidate and .1% for any other candidate.