Here are the main highlights for some of New Zealand’s key commodities this month. The full report provides an overview of the developments to watch in the upcoming weeks.
· Dairy: Global milk supply is rising due to improved farmgate prices and affordable feed, except in China where milk production stalled in the second half of last year. New Zealand's production spiked, but growth may slow. Higher milk prices could impact consumer costs.
· Beef: Beef farmgate prices in New Zealand have reached record highs, driven by strong demand and favourable market conditions. While demand from the US boosts export earnings, the market in China remains stagnant.
· Sheepmeat: Strong demand and tight supply are sustaining high farmgate prices. New Zealand’s lamb kill to date shows regional disparities, with North Island lamb slaughter up 9% and South Island down 21%.
· Farm inputs: Urea and phosphate prices remain elevated as supply issues persist. According to our affordability index, nitrogen and phosphate prices have reached unaffordable levels in many countries, which should help curb global demand.
· Interest rates and FX: The RBNZ delivered a third 50-basis-point cut in February to take the OCR down to 3.75%. We expect a slower pace of cuts from here and for the New Zealand dollar to converge on 0.5400 over the next six months.
· Oil and freight: Geopolitical risks are the only remaining upside risk for energy prices, and containerised freight rates are falling again. RaboResearch projects Brent crude oil will average USD 70/bbl in 2025.
This publication has been prepared by Rabobank New Zealand Limited and Coöperatieve Rabobank U.A. (New Zealand Branch) (Incorporated in the Netherlands) (collectively referred to as ‘Rabobank New Zealand’). Read more
