Rural Wrap

Primary Prices Performing

Doug Steel -
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- Primary product pricing generally firm
- 2017 goods exports expected to lift by over $3b
- Farm spending rising cautiously
- Debt repayment on the agenda too
- Very high terms of trade an economic boon
- Sets the scene for a buoyant National Fieldays

Many primary product prices are not only higher than a year ago but they also currently sit above their 5-year average. It’s a positive sign for incomes. To the extent that farmers spend the additional cash, it will be a boost for economic activity. But there are also debt repayments and saving to consider. In any case, it is good to have options.

Milk Ahead

Doug Steel -
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- Dairy prices have recovered from last year’s lows
- But prices have eased back in 2017 so far
- EU, NZ supply; Chinese demand important from here
- Dairy prices remain a bit stretched relative to oil, grains
- Our milk price forecasts remains at $6.10 for 2016/17 and $6.00 for 2017/18
- Many moving parts, so we look at some scenarios

International dairy prices have eased back a bit so far in 2017, following their strong recovery in 2016. The GDT price index in mid-March was nearly 10% lower than where it started 2017, but more than 50% higher than a year ago.