A report by the New Zealand government predicts world dairy prices will start to soften. The Kiwi economists predict New Zealand's average milk price for the coming season will drop to $18/cwt, down from a record $21 this past season.
Following this season, New Zealand is predicting milk prices in the $16/cwt range for the next few years.
Total export revenue from dairy products jumped 25% last year to $7.1 billion. The government predicts it will peak at $8.5 billion for the 2008/2009 season. Though milk prices are expected to decline, production is expected to rebound with the end of the New Zealand drought.
In fact, too much rain this spring has now become the problem. Many areas had received twice their normal rainfall in July, and by mid-August, had already received what would be normal for the entire month. As a result, pasture management has been extremely challenging. And because of last year's drought, there is very little supplement feed available.