That is the crux of the problem,globally there is to much milk products available at auction and not enough countries with money to hold market up. I went to a Rabo Bank industry forum about 2months ago and interestingly they told us that at current pricing some poorer countries that generally couldn't afford to buy dairy have entered the market and are providing a floor to the index, unfortunately even if Russian sanctions were lifted they wouldn't have the money to make a huge impact in the short term.Euro farmers are dealing with lower subsidies and there milk quotas have been lifted, so to hold revenue they are producing more milk. this will be unsustainable because like us they will be open to market whim. They are not low cost producers.
Summed up Rabo told us short term not to rosey, but 5 years ahead they were quite bullish on our industry here in Australia. Fonterra have given there Nz farmers a slight rise because production is sliding, in Australia bad season in Vic and now less price for milk will see our production slip as well. Good chopper pricing, that is cows killed for meat, also adds to production decline.
It is possible I hope we are getting close to the bottom in the price cycle for milk, hey you have to be optimistic.
MGC Price at posting:
86.5¢ Sentiment: Hold Disclosure: Not Held
