Dairy index falls on global woes

Last updated 12:39 27/11/2008

Relevant offers


Government moves to make dairy industry more competitive Rural news wrap: October 21 MPI ready to handle foot-and-mouth disease outbreak Global wine shortfall but wine drinkers won't be stung Heavily indebted meat ginger group rides into sunset MyFarm investment company expands into vineyards Vet warns farmers against cheap dairy grazing Pupils make furniture from alternative tree species Catchment plans should be based on realism not idealism Rural residents need to report all crimes

The dairy industry continues to be buffeted by the global economic downturn, with sharemarket operator NZX's Agrifax dairy index showing a 5 percent fall in November.

The index fell 70 points to 1255 this month, down from 1325 in October, and well below its peak of 1474 six months ago.

The Agrifax dairy index comprises the five major elements making up New Zealand's dairy industry: farm capital (25 percent), farm income (20 percent), commodity prices (15 percent), exchange rate (15 percent), and the share prices of NZ traded equities involved in the dairy industry (25 percent).

"The main instigators in the fall [in the index] were once again the strong depreciation of commodity prices, combined with the scaling back dairy company payouts [by Fonterra]," Agrifax editor Susan Kilsby said.

Kilsby expected the weakening kiwi dollar to cushion softer commodity prices, but warned that improved returns could, however, take a further six months to achieve.

"Prices are expected to fall further in the short-term," she said.

"Dairy commodities remain a buyers market and prices will realistically fall further in the short-term."

Agrifax said because of further downside risk to dairy prices, it was now revising its forecast for milk payout to farmers to NZ$5.90 per kg of milk solids (MS) for the current season.

Fonterra revised its forecast payout for the 2008/09 season, down to NZ$6.00 per kgMS from NZ$6.60, last week.



Ad Feedback

- BusinessDay.co.nz

Special offers
Opinion poll

Is it time for authorities to introduce tougher penalties for poaching?



Vote Result

Related story: Booby traps for poachers cost farmers

Featured Promotions

Sponsored Content

Agri e-editions

Digital editions

Read our rural publications online