Rabobank dairy analyst Emma Higgins told South Canterbury dairy farmers at Timaru that most of the extra supply would need to be met by the northern hemisphere.
“New Zealand will really struggle to be a significant player in providing the additional milk required given we are facing challenges on-farm in the form of increasing compliance costs and tightening regulatory requirements,” she said.
Demand growth would be driven by the emerging markets in Asia and Africa while consumption growth in China would grow at a slower rate as it adjusts to a “new norm.”
“In South East Asia we believe the opportunity lies in Indonesia and Vietnam. We’re picking them to be the growth engines across the next five years,” Higgins said
Rabobank modelling suggests a farmgate milk price somewhere in the low $6 a kilogram of milk solids figure for 2017-18.
Short term prices look favourable with a low $6 figure/kg MS forecast. The outlook for New Zealand’s dairy industry was positive and farmgate milk prices were forecast to reach $6.25/kgMS for the 2017/18 season, Higgins said.
Commodity prices were expected to trade in a higher range over the coming years, although volatility in the market would remain.