ANZ Agri Focus

A bi-monthly overview of current topics and developments in the rural sector. Includes a review of the past month and the rural property market, plus information on key commodities, financial markets and borrowing strategies.

Susan Kilsby

Agricultural Economist, New Zealand

About Susan

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2024 editions

June 2024: Brighter days ahead

Global economic markets remain subdued, and this is impacting demand and returns for New Zealand’s export products. 

Some industries are faring better than others, and small but positive signs are emerging as global supply and demand rebalance.

This is apparent in the dairy industry where next season’s milk price is forecast to be stronger than returns for the 2023-24 season.

Slower economic growth in China is weighing on industries with a high exposure there, including logs and mutton. These industries are diverting some produce to other markets, but China is still their main buyer.

Consumer demand in the US is proving more resilient, particularly where exporters can tap into wealthier segments prepared to pay for high-quality, healthy products.

Autumn and early winter in New Zealand have been cooler and drier than usual, making it tough for regions hit hard by drought last year. But the drier conditions have been favourable for harvesting.

Most of the country is expected to have a drier-than-normal winter, meaning drier soils in eastern and northern regions, while western regions are expected to normalise.

April 2024: High and dry

The global outlook and the climatic outlook vary hugely between industries and locations.

Consumer confidence in China remains low and this has reduced demand for a range of New Zealand’s export products, from lamb and mutton to logs. What these products have in common is a dependence on sales into China, which has tended to pay higher prices than other markets for many years.

Demand from European markets is proving more robust, despite the region’s current economic downturn. This should probably come as no surprise, as many of our food exports are staple foods there.

New Zealand’s autumn has so far been hot and dry, which has assisted with the harvest of many horticultural products, particularly grapes. However, pastural farmers are being hindered by drought.

February 2024: Harvest time

Mid-way through the predicted long, hot summer, some parts of New Zealand are benefiting from regular rainfall, but areas of the east coast are parched, particularly Wairarapa and Marlborough. Wine producers will be happy, but it will be tough going for pastoral farmers.

As we head into the main meat processing season, lamb prices are weak, as international demand remains down. Beef prices are also down on last season but are faring better than lamb.

A slowdown in global milk supply is putting a little upward pressure on prices and benefitting the dairy sector.

Farm costs remain high, but upward pressure on pricing is easing. We see the Reserve Bank (RBNZ) continuing to lift the OCR in the coming months, putting further pressure on interest rates, though this will be mitigated by the likelihood that the market will continue to price eventual cuts. 

Freight costs are rising as hostility blocks the Suez Canal and drought limits both the numbers and weights of ships traversing the Panama Canal. Asian routes are not directly affected, but costs overall are rising. Higher freight costs, like the high New Zealand dollar, erode farmgate profitability.

Contact an ANZ Agri Specialist

As each agricultural sector has its own unique characteristics and challenges, we have teams of specialists with in-depth knowledge and expertise in each of these areas to help support your agribusiness.

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