Autumn springs hope and concern in New Zealand

Published Mar 28, 2024

Tridge summary

In February 2024, dairy commodity markets experienced positive trends, with notable price increases in butter and SMP, while WMP and cheddar prices remained stable. This is attributed to slow milk supply growth, which is expected to continue limiting production expansion, albeit leading to higher farmgate milk prices that benefit farmers. Concurrently, New Zealand's beef and sheepmeat markets are showing positive trends, with stable prices despite challenges. The Reserve Bank of New Zealand has kept the OCR unchanged, reflecting satisfaction with the current control over price growth. However, it is anticipated that the RBNZ will cut rates later in the year to target a 2% inflation rate without triggering a severe economic downturn, following a similar trajectory to rate cuts in the USA, which is expected to lead to an appreciation of the New Zealand dollar against the US dollar to 0.6400 over 12 months.
Disclaimer: The above summary was generated by Tridge's proprietary AI model for informational purposes.

Original content

Dairy commodity markets have laregly continued their positive trend over the month of February 2024. Butter prices have continued to soar, lifting 12% over February 2024 and are 20% higher than at the beginning of the calendar year. SMP continues to recover, lifting 8% over February 2024, while gains for WMP slowed to 1% and cheddar prices stalled. Milk supply growth from the global dairy exporting crowd continues to struggle. A return to meaningful production expansion from these regions will take some time. Higher dairy commodity prices will translate into firmer farmgate milk prices in all regions; a welcome relief for farmers who struggled to achieve profitability in 2023. At this stage, it's likely that it will take until the second half of this calendar year for volumes from the dairy exporting heavyweights to move back into positive territory. Despite the struggling milk pool growth, sluggish demand remains the key influence on commodity prices, and therefore, farmgate ...
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