Norgate tips milk prices to rebound

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International milk prices will rebound strongly next March or April, according to New Zealand Farming Systems Uruguay director and former Fonterra chief executive Craig Norgate.

Making the prediction at the PGG Wrightson offshoot's annual meeting in Auckland yesterday, he said there was still strong demand from China and India and oil-producing economies such as Algeria, Venezuela, Mexico and Indonesia.

"Even if we get a global recession, as we may well do over the next 12 to 18 months, you're still seeing that level of demand that was there a year ago continue," Mr Norgate said.

On the supply side, only the US was really ramping up production for export, he said. "With the exception of the US, you haven't really seen a supply response to the high prices.

"There's more drought in Australia and drought in New Zealand, while the increase in milk production from Brazil, Argentina and Uruguay was minuscule.

"You did see milk volume increase in Europe, but it's not manifesting itself in exports. I generally believe the prices have come back far more than they needed to clear last season's overhang."

NZ Farming Systems Uruguay sells all its milk to Uruguayan dairy company Conaprole and supplies around 7 percent of Conaprole's milk.

It is paying its farmers the equivalent of $7.70 a kilogram of milk solids.

A shareholder asked if NZFSU was concerned about the possibility of an outbreak of foot and mouth disease in Uruguay.

PGG Wrightson group general manager South America Barry Brook said there had been an outbreak and the government had introduced a compulsory vaccination programme.

- © Fairfax NZ News