Adam had the Dairy auction news overnight
ANZ economists:
- Have cut their forecast Fonterra 2014/15 milk price payout by 40 cents to $4.85/kg of milk solids
- Have also placed their call for a March 2015 RBNZ rate hike “under review”
- “We have today reduced our forecast for the 2014/15 payout to $4.85/kg (from $5.25), assuming a modest bounce back in global prices.
- This sits well below the average cost of production for farmers and will have a significant impact on discretionary spending”
- We’d also add that the dairy sector has a huge amount of exposure to floating (interest) rates of around 70%. A lower dairy price also has significant implications for the wider economy and monetary policy.
- Moves in the OCR look a long way off, with our call for the next move to arrive in March now under review.
- Expect the NZ dollar to remain under pressure.”
