Dairy Market Analysts Forecast $8-Plus Farmgate Milk Price for 2025 Season
Source: The DairyNews
Dairy market analysts have reached a consensus on their forecasts for the 2025 farmgate milk price, bringing optimism to dairy farmers with predictions exceeding $8.
Four economists and analysts from major banks, along with the SGX-NZX dairy insights team, project a price range between $8.35 and $8.50. Fonterra is expected to release its initial forecast on May 30, estimated to be between $7.30 and $8.50, with a midpoint of $7.90, setting the advance price schedule starting June 1.
The recent recovery in Global Dairy Trade (GDT) prices during April and May has provided a robust foundation for the new dairy season. The May 7 GDT event set the farmgate "spot" milk price at $9.25, compared to $8.42 from the NZX milk price model.
Other forecasters have produced their own models: ANZ predicts $8.50, ASB $8.35, and both Rabobank and Westpac project $8.40. These models consider various factors such as supply and demand, weather forecasts, forward prices, foreign exchange rates, and historical trends.
ANZ agricultural economist Susan Kilsby noted the reduced volatility in milk production across major producing regions like Europe, the United States, and New Zealand. While the US has potential for increased production, European output is constrained by environmental regulations, impacting countries like the Netherlands and Ireland.
Kilsby highlighted the challenges faced by New Zealand farmers, including rising input costs for fuel, fertilizer, insurance, and interest rates. DairyNZ’s economic tracker reports a current break-even figure of $7.75 for both the 2024 and 2025 seasons. Additionally, ANZ anticipates a gradual appreciation of the NZ dollar against the US dollar, reaching US63c by year-end. Fonterra’s foreign exchange hedging and forward sale contracts will mitigate some of these impacts.
Rabobank senior agricultural analyst Emma Higgins pointed out that low profitability has led to reduced dairy herds in the US and South America, with adverse weather affecting Europe. This limited global milk supply growth is expected to support continued dairy market recovery and improved milk prices worldwide.
ASB senior economist Chris Tennent-Brown indicated that the supply and demand balance is likely to keep prices above the 10-year average of $7. He forecasts the 2024 milk price to end between $7.70 and $8.10, with Westpac senior economist Kelly Eckhold predicting a rise to $8.40 at the start of the new season.
SGX-NZX milk price futures for the 2025 and 2026 seasons have adjusted slightly from $8.60 in January to $8.25 and $8 respectively. The MKP25 contract remains optimistic but slightly trails the NZX model, influenced by the favorable results of the May 7 GDT auction.
All analysts will benchmark their forecasts against Fonterra’s upcoming comprehensive forecast on May 30, providing further clarity for the 2025 dairy season.
The recent recovery in Global Dairy Trade (GDT) prices during April and May has provided a robust foundation for the new dairy season. The May 7 GDT event set the farmgate "spot" milk price at $9.25, compared to $8.42 from the NZX milk price model.
Other forecasters have produced their own models: ANZ predicts $8.50, ASB $8.35, and both Rabobank and Westpac project $8.40. These models consider various factors such as supply and demand, weather forecasts, forward prices, foreign exchange rates, and historical trends.
ANZ agricultural economist Susan Kilsby noted the reduced volatility in milk production across major producing regions like Europe, the United States, and New Zealand. While the US has potential for increased production, European output is constrained by environmental regulations, impacting countries like the Netherlands and Ireland.
Kilsby highlighted the challenges faced by New Zealand farmers, including rising input costs for fuel, fertilizer, insurance, and interest rates. DairyNZ’s economic tracker reports a current break-even figure of $7.75 for both the 2024 and 2025 seasons. Additionally, ANZ anticipates a gradual appreciation of the NZ dollar against the US dollar, reaching US63c by year-end. Fonterra’s foreign exchange hedging and forward sale contracts will mitigate some of these impacts.
Rabobank senior agricultural analyst Emma Higgins pointed out that low profitability has led to reduced dairy herds in the US and South America, with adverse weather affecting Europe. This limited global milk supply growth is expected to support continued dairy market recovery and improved milk prices worldwide.
ASB senior economist Chris Tennent-Brown indicated that the supply and demand balance is likely to keep prices above the 10-year average of $7. He forecasts the 2024 milk price to end between $7.70 and $8.10, with Westpac senior economist Kelly Eckhold predicting a rise to $8.40 at the start of the new season.
SGX-NZX milk price futures for the 2025 and 2026 seasons have adjusted slightly from $8.60 in January to $8.25 and $8 respectively. The MKP25 contract remains optimistic but slightly trails the NZX model, influenced by the favorable results of the May 7 GDT auction.
All analysts will benchmark their forecasts against Fonterra’s upcoming comprehensive forecast on May 30, providing further clarity for the 2025 dairy season.
