Rabobank’s dairy analyst told The Country’s Jamie Mackay that stalling world production combined with increased demand is a good news double.
“We called it at the end of last year, we said things are going to improve”.
With global supply being tight, there is less product available to export and now New Zealand’s season has joined this trend said Higgins.
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“That’s going to really help underpin the commodity price improvement that we’ve seen already, since basically the end of 2018.”
Another factor aiding commodity prices is an “exceptionally robust” demand from China said Higgins, although she did have a couple of warnings about this development.
“We think that stock levels in China are now replenished and we think we’re going to see a lull in terms of Chinese buying over the next couple of months.”
Higgins’ second warning was – winter is coming.
“The IMF today just reforecast their numbers around economic growth. So we’ve seen that come back from 3.5 per cent to 3.3 per cent for 2019.
“The impact of that economic slow down and what effect that might have on consumption for the products that we export needs to be monitored.”
Despite the risks, Higgins said she remained hopeful for a possible $7.15 forecast Farmgate Milk Price for the 2019/20 season.