Weather Woes Hit Dairy On Both Sides of Equator

July 7, 2015 01:28 PM
Weather Woes Hit Dairy On Both Sides of Equator

Dairy producers on both sides of the Equator are dealing with excessive moisture, which could increase the cost of production in the months of ahead.

“New Zealand dairy producers, plagued by drought earlier this year, are now dealing with major flooding in the southern part of the North Island,” notes Mary Ledman dairy economist with the Daily Dairy Report and president of Keough Ledman Associates Inc., Libertyville, Ill.

“As of June 23, Fonterra had contacted more than 500 farms in the affected area, but only 30 farmers requested immediate help,” she adds. “Milk pick-ups continued on schedule to all but three operations. In upcoming weeks, dairy producers in the region will be busy clearing silted pastures and sheds, repairing damaged facilities and fences, and securing water systems.”

Meanwhile Fonterra’s dairy farmers have overwhelmingly embraced the cooperative’s latest guaranteed milk price (GMP) offering of $5.25 per kilogram of milk solids (kg/MS). The price equates to a U.S. price of approximately $14/cwt., notes Ledman.

Fonterra reported that it received offers from 443 farms for a total of 45.2 million kgMS, which was more than double the number of farms that applied last year. The cooperative budgeted 40 million kgMS for the first of two GMP contracts offered for the 2015-16 season.

As a result of the initial offering being oversubscribed, applications at $5.25 were reduced by 16.5 percent, notes Ledman.

The second opportunity for New Zealand producers to subscribe to the GMP will be in December 2015,” she says.

According to USDA’s Dairy Market News, initial comments from contacts in New Zealand believe the floods will have only a minor impact on the industry, despite substantial damage to personal property in some areas.

In the United States, a low-level jet stream has continued to dump excessive rains across a wide swath of the Corn Belt, which is threatening to push soybean meal prices higher than earlier expected. January soybean futures closed July 6 just shy of $339 per ton, after bottoming out below $295 in early June.

About 3.5 million acres of soybeans were unplanted as of July 5, and some corn and soybean plants were dying in the worst hit areas of the Corn Belt, particularly Missouri.

According to Monday’s Crop Progress report, 37 percent of the nation’s soybeans were in fair to very poor condition, compared with 28 percent a year ago.

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