Dairy product prices fell again at the most recent Fonterra Global Dairy Trade (GDT) auction.

The event represents the ninth negative auction for prices in a row and the GDT index is now 50% lower than the highs seen in February 2014.

Average prices paid at the auction fell over 10% on the last event held two weeks previously which itself was down over 5.9%.

Significantly additional volumes of milk powder had been submitted for sale. And on the back of this development alone, it was unlikely that prices would be increasing.

Key Results

  • AMF index down 10.6%, average price US$2,621/MT
  • Butter index down 9.5%, average price US$2,460/MT
  • BMP index down 4.4%, average price US$1,794/MT
  • Ched index down 13.9%, average price US$2,613/MT
  • LAC index up 1.9%, average price US$549/MT
  • RenCas index down 8.0%, average price US$5,430/MT
  • SMP index down 10.1%, average price US$1,702/MT
  • WMP index down 13.1%, average price US$1,848/MT

Farmers warned for the worst cashflow situation in 25 years

Meanwhile, New Zealand dairy farmers have been warned that they could experience the tightest cashflows in 25 years over the coming months.

Speaking to the Timaru Herald the Chief Executive of Dairy Holdings Ltd, a New Zealand company that comprises over 50 farms and milking over 44,000 cows, Colin Glass, said things will get worse for the industry before they get better.

He cautioned dairy farmers to reduce costs and prepare for an even tougher few months ahead.

“There will be no cash coming in for any dairy farmer between now and October,” he said.

“It is the tightest in terms of cashflow the industry has seen since the early 90s.

Glass told Irish farmers at the Positive Farmers conference earlier this year that the three key performance indicators for dairy farmers are somatic cell; weekly pasture walks; and body condition score.

Somatic cell count, he said, is the key thing for Dairy Holdings, and across 56 farms its average was 133,000, with lots of farms with figures below 50,000.

Weekly pasture walks and cody condition scoring, he also said were hugely important for dairy farmers.

Weekly pasture walks, he said, are important not just for understanding a farm’s individual feed situation, but also as a means of ensuring that dairy farmers or the manager/sharemilker is completing weekly walks across the entire farm and understanding matters requiring attention, such as maintenance and pasture run out.

Somatic cell counts, he said, monitored throughout the year are a very good insight into whether good quality milk is continuing to be sent from the farm.

Dairy Holdings, he said, considers monitoring and review as hugely important. “If you don’t measure it you can’t manage it.

“Monitoring and review has been key for us.”

He also said that open and frank discussions at an early stage are very important in addressing lower levels of performance.

“The business culture must be right. The farm system must be right. It achieves consistent and repeatable profitability.

“Optimising pasture harvested is key, but repeating performance year-to-year across a number of properties at scale requires repeatable systems to be in place.”