Dairy price jump

The latest Global Dairy Trade auction has seen average prices jump by 11.4% to the highest level since July 2014.

gdt2016nov1index

Prices have been up and down quite a bit so it’s not possible to know if this is a jump as part of a positive trend or a bit of a blip.

gdt2016nov1trend

What dairy prices do could have a significant impact on next year’s election. A dairy recovery is likely to help National as long as the rest of the economy stays good.

Leave a comment

7 Comments

  1. A nice slow climb up another $300 dollars over the next 12-14 months would be really nice…. would certainly make a lot of bankers much more comfortable

    Reply
    • patupaiarehe

       /  2nd November 2016

      And a lot of farmers…

      Reply
      • True… but I was more concern about macro economic risks resulting from Banks loans to the dairy sector turning completely to custard. That wouldn’t have been good for anyone

        Its a good thing for everyone that the price has turned, hopefully to a more stable long term price so the sector doesn’t go all California gold rush again and spawn lots of barely economic conversions and expansions…

        Reply
        • patupaiarehe

           /  2nd November 2016

          A few years back, when I was working for an ag contractor, I had a very interesting conversation with a farm owner, who was third generation on a freehold property. He related to me how a few of his neighbours were just breaking even on $7/kgMS, in the hope that if they could do it for 10 years, they could retire on the capital gain from the farm…..

          Reply
          • Foolish stuff…..and with that attitude they deserve to go broke…

            Reply
            • patupaiarehe

               /  3rd November 2016

              The banks who lend to those with a business plan like that certainly deserve to Dave.

            • No argument from me. I prefer my bankers to be a tad boring – prudent, conservative and with an eye to ability to repay borrowings. One wonders what what if Risk scenario modelling the banks were doing with the lending they were undertaking to Dairy as Farming is notoriously boom and bust.

              Risk banking is all well and fine when its merchant/investment bankers with their own coin and assets as collateral. Retail/Mainstream banks should be much more circumspect

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: