Timaru District Quarterly economic monitor - March 2020

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Total dairy payout

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Highlights for Timaru District

  • Timaru District's total dairy payout for the 2018/19 season is estimated to have been approximately $350m.
  • Timaru District's dairy payout for the 2019/20 season is expected to be approximately $401m, $51.8m higher than last season, assuming that production levels from last season are maintained.
  • The total dairy payout for New Zealand is estimated to have been approximately $11,964m in the 2018/19 season, and is expected to be $1,773m higher in the 2019/20 season.

National overview

Expectations for the dairy sector have softened, with dual issues putting the primary sector under pressure. Drought conditions continue to present a substantial challenge for regional communities, with feed both less accessible and more expensive to access. The COVID-19 pandemic has also put dairy prices under pressure. Infometrics is still using the midpoint of Fonterra’s $7.00-$7.60/kgms pay-out in our estimates, but our internal expectations point towards a pay-out at the lower end of this range, at around $7.05/kgms. A decline from $7.30/kgms to $7.05/kgms would reduce the national pay-out by around $470m. Our early estimate for the 2021 season is currently tracking at $6.15/kgms, although there is significant uncertainty. Dairy prices have firmed in recent weeks as Asian demand rebounds, and dairy export values remain above 2019 levels.