ASB Farmshed Economics Report

Friday, 20 June 2014, 11:27 am
Press Release: ASB

ASB Farmshed Economics Report Special edition Vintage 2014

20 June 2014

Special edition: 2014 production season hits all the high notes

• Opening milk price forecast welcomed as the meat sector continues to shine.
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• Revised OCR view, with next increase now expected in July.
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• Special edition topic: The 2014 production season has been strong overall, with the dairy and wine sectors, in particular, having bumper seasons.
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It has been a mixed month for the rural commodities and financial markets according to the latest ASB Farmshed Economics report.

“The biggie this month was Fonterra setting its milk price bar with its opening forecast of $7.00 per kg of milk solids largely in line with expectations,” says ASB Rural Economist Nathan Penny. “On the flipside, the 25 cent drop in the 2013/4 season’s milk price forecast has underwhelmed some despite the price of $8.40 per/kg remaining a record one.”

“As predicted, the RBNZ lifted the OCR by 25bps but did manage to surprise markets by sticking closely to its interest rate outlook. This has prompted us to revise our view and we now expect the next OCR lift will happen as soon as July.”

Looking at commodity prices, the meat sector continues to be the star. “As predicted, lamb prices have continued the drive upwards with supply constrained and international demand growing. Meanwhile, beef prices are high and we expect them to remain so over the upcoming season.”

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In this special edition of the Farmshed Economics Report we take a look back at how the 2014 production season has shaped up by sector and overall it’s been strong. “Both the dairy and the wine sectors set new production records in 2014, however grapes have nearly stolen the show. 2014’s wine vintage has impressed with both quantity and quality with the overall volume of grapes harvested up nearly a third.”

“The rural production outlook looks strong for the upcoming season with a mix of cyclical and structural factors pointing towards more good news for Kiwi producers. If the weather can manage to cooperate as well, that is,” concludes Mr Penny.

About Farmshed Economics

Farmshed Economics is a monthly report that gives ASB’s economic take on recent rural developments and includes our outlook for rural commodities and the relevant financial markets. The full report is attached and is available online.

Each quarterly Farmshed Economics will have a special feature on a relevant topic.

If you would like to receive ASB updates and reports by email: https://reports.asb.co.nz/register/index.html

ENDS

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