Hamilton City Quarterly economic monitor - March 2019

Total dairy payout

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Highlights for Hamilton City

  • Hamilton City's total dairy payout for the 2017/18 season is estimated to have been approximately $12.9m.
  • Hamilton City's dairy payout for the 2018/19 season is expected to be approximately $12.6m, $0.36m similar to last season, assuming that production levels from last season are maintained.
  • The total dairy payout for New Zealand is estimated to have been approximately $12,308m in the 2017/18 season, and is expected to be $347m lower in the 2018/19 season.

National overview

Fonterra’s farmgate milk price forecast for the 2018/19 dairy season was recently revised to $6.30-$6.40/kgMS, with recent GlobalDairyTrade auction results confirming this price range. Lower offer volumes at recent GDT auctions have driven prices higher, but higher production and lower-than-expected prices have led to a more conservative pay-out estimate from Fonterra. This price is above Dairy NZ’s estimate of the breakeven point for the average dairy farmer of $5.50/kgMS. The starting $6.25-$7.25/kgMS milk price for the 2019/20 season reflects the uncertainty over future dairy prices, but remains above the breakeven price, supporting farmer expenditure.