Dairy markets boosted by GDT result

New Zealand’s third warmest summer ever is a growing factor in rising dairy markets which may help to ease Irish milk producers’ Brexit worries.

Tuesday’s Global Dairy Trade auction brought a seventh consecutive rise in the average product price index, partly due to buyers seeing New Zealand dairy farmers reaching crunch points for feed planning, milking frequency and drying off, due to very dry weather. On Tuesday, the Global Dairy Trade Price Index rose 3.3%, following previous rises of 0.9%, 6.7%, 4.2%, 2.8%, 1.7%, and 2.2%.

The biggest rises were for buttermilk powder (11%) and for whole milk powder (6%), both important New Zealand products.

Global markets are very sensitive to supply levels from New Zealand, the world’s largest exporter of butter, second only to the EU in cheese exports, and by far the largest exporter of dry milk powders. But supply levels are now threatened after many areas of the country have endured one of their driest seasons, with up to 40 days without rain. Some parts are already officially in “severe drought”, while meteorologists describe other areas as “extremely dry”, or very dry.

However, forecasters hope the last two weeks of March and early April will be rainy, to bring some welcome wet to parched regions.

For most regions in New Zealand, 70-130mm of rain is needed to fill the current soil moisture deficit, according to the DairyNZ research and development service for dairy farmers. DairyNZ says some farmers have reduced milking frequency, others are selling empty cows and other culls, and drying off young cows in poor condition.

New Zealand farmers had been heading for a record year of production but must now take action to cope with reduced pasture growth, down 33kg of DM/ha/day compared to 12 months ago in Waikato, New Zealand’s main dairying region, with 1.8 million dairy cattle.

The Irish dairy industry could benefit from the challenges in New Zealand, if reduced dairy product supply from down under (Australian production is running 5% behind last year) boosts global markets, and milk prices for farmers. It would be a particularly welcome boost if a no-deal Brexit outcome were to put pressure on the Irish dairy industry.

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