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Down, but not out

Monday, 15 December 2014, 2:49 pm
Press Release: ASB Bank

Down, but not out

Dairy prices end 2014 low, in contrast to where they started the year

Beef prices end 2014 still flying high

The Reserve Bank delivers an early Christmas present

It’s a mixed end to 2014 according to the latest ASB Farmshed Economics Report, with dairy prices low compared to the high prices at the start of the year.

“Beef prices, on the other hand, are providing farmers with some festive joy and are currently 23 percent higher than last Christmas,” explains ASB Rural Economist Nathan Penny. “Lamb prices peaked ahead of the previous two seasons this year, although prices have softened recently.”

Meanwhile, the Reserve Bank has delivered an early Christmas present in the form of a toned-down interest rate outlook. “We are in for a lengthy period of low interest rates,” says Mr Penny.

In this quarter’s special edition of Farmshed Economics we take a look at the dairy’s prospects over the seasons ahead.

“The dairy sector posted its best season ever in 2013/14, with a record milk price bolstered by record production. But 2014/15 is shaping up as the mirror opposite.”

“That said, we don’t expect the milk price to stay in the doldrums beyond this season. Slower milk production over 2015 will give time for demand to catch up to supply.”

“After hitting a forecast low of $4.70/kg this season, we expect the milk price to rebound to $6.00/kg the following season. We also reiterate that the long-run prospects for dairy remain solid.”

ENDS

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