Milk price rollercoaster

Milk price rollercoaster


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POISED: Freshagenda's chart shows the wholesale milk price trending down but analyst Steve Spencer says demand remains strong and buyers with adequate supply are simply waiting for lower prices.

POISED: Freshagenda's chart shows the wholesale milk price trending down but analyst Steve Spencer says demand remains strong and buyers with adequate supply are simply waiting for lower prices.

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As farmgate milk prices hit record levels, the wholesale price is steadily coming down. We asked two analysts whether farmers should be concerned.

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Analysts say the market can sustain high farm-gate milk prices despite wholesale falls.

Rabobank senior dairy analyst Michael Harvey has lifted the forecast full-year farm gate southern export milk price to $6.60 a kilogram of milk solids.

"There are a lot of assumptions in the forecast, including that the Aussie dollar will sit around 68-69 cents," he said.

"We can rationalise farm gate pricing up to $7.00/kgMS with a value-added component and a domestic premium."

Freshagenda director Steve Spencer said the wholesale market was "nicely poised" and felt farm-gate prices "in the high sixes" were reasonable.

"Wholesale prices have come down because they went too high and buyers are waiting the market out but there's still demand," Mr Spencer said.

"The downside risk is production in Europe and New Zealand.

"Europe is having a hot summer, which will make it harder to maintain production but NZ's season has improved and, if it's a good spring, that will test prices."

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