Fonterra has lifted its milk price forecast for 2018/19 to $6.55 and so have we. This follows from generally higher international prices and a relatively stable NZD during 2018. We expect global dairy prices to drift lower in 2018, but downside risks have moderated with a higher Euro, higher oil prices, and robust dairy demand. Reflecting this, we lift our 2018/19 milk price forecast to $6.10. But with wide error bounds around any season-ahead milk price forecast, we look at some alternative scenarios.
Not All Bad
Farmer confidence has fallen sharply over recent months. We take a look at what might be behind the confidence slide. It’s interesting that this time around it is not the exchange rate or product prices that are weighing most on farmer’s minds.