New Zealand Dairy Seasonal Outlook: A Note of Caution Amid Optimism

Dairy commodity prices have shaken off the past year’s uncertainty, entering 2021 with a strong price trajectory, and current supply and demand dynamics suggest that commodity prices are likely to remain at elevated levels for the opening months of the 2021/22 season.

Report summary

World markets remain supportive of strong dairy commodity prices, with economic growth improving around the globe, foodservice channels beginning to re-open, and high feed grain prices ensuring producers’ margins remain tight globally, helping to keep milk production growth in check. “In this price rally, Rabobank anticipates demand to remain in the driving seat, with the strength of the upper range of Fonterra’s forecast Farmgate Milk Prices dependent on Chinese import demand,” according to Emma Higgins, Senior Analyst – Dairy.

“Rabobank anticipates a farmgate milk price of NZD 7.60/kgMS. We do, however, suggest some level of caution for what lies ahead as we welcome back volatility to commodity prices.”