Rural Economic Note: No news is good news

Looking over recent months, dairy market fundamentals have not changed much.  Supply remains tight, although NZ summer production so far has fared better than the very weak spring.  Meanwhile, demand is firm, although risks remain in play.  Dairy, like other markets, will continue to fret over the ‘Trump factor’ and the potential for protectionism impacting on dairy trade.

However at this juncture, no news is good news.  For dairy markets ‘no news’ is likely to translate into one of those rare periods where prices hold steady at or near current levels.  Of course given that this level is a relatively healthy one by historical standards, this is ‘good news’ for this year’s milk price.  

As a result, we reconfirm our 2016/17 milk price forecast of $6.50/kg.  Also, the current market dynamics bode well for a relatively strong start to the 2017/18 season.  With that in mind, we note our 2017/18 forecast remains $6.75/kg.