BMI View: We believe that increased access to international markets, particularly Taiwan and China, will prove to be the prime growth driver for the agribusiness sector in New Zealand over the medium -to- long term. This will be supportive for both the dairy and livestock segments. The dairy sector in particular will benefit from export demand growth, as many other countries in Asia are facing growing domestic demand and relatively limited production capacity . However, the dairy sector will suffer over the short term due to low prices on the international market , as well as herd rebuilding . We believe prices will pick up again later in 2017 .
Milk production growth to 2019/20: 4.6% to 22.9mn tonnes. Given the small domestic consumption base and the high productivity of the sector, long-term expansion will mainly come from export opportunities, particularly to Asia and the Middle East, which are forecast to enjoy significant dairy consumption growth over our forecast period.
Milk powder production growth to 2018/19: 15.4% to 1.6mn tonnes. Across all the dairy segments, export opportunities (particularly to China) will be the main growth drivers over the medium term.
2016 real GDP growth: 2.3%, down from 3.4% in 2015. Forecast to average 2.4% between 2016 and 2020.
We maintain our view for CME milk prices to start recovering from 2017 onwards, but have also revised down our forecast and now see prices averaging USc14.50/cwt that year compared with USc15.80/cwt previously. Higher grains prices in the coming years will undermine returns for dairy farmers and limit milk production growth in the US, while Chinese import demand will recover to some extent in late 2016. Moreover, we expect Asia Pacific prices to pick up slightly towards the end of 2016 and in 2017 as New Zealand production will decrease for a second consecutive season in 2016/17 (starting in June 2016), which should provide some support to US prices in 2017. However, the upside will be limited for CME prices, as US production growth will continue to expand. We hold a more bearish view than that implied by the futures curve, as the May 2017 contract is currently priced at USD15.30/cwt.
|Ticking Up In 2017|
|Third-Month Class III CME Milk, USD/cwt (weekly chart) & BMI Forecasts|
|Note: Horizontal lines represent BMI average annual forecast. Source: Bloomberg, BMI|
The New Zealand Agribusiness Report features BMI Research's market assessment and independent forecasts for production, consumption and trade across core agricultural commodities.
BMI's New Zealand Agribusiness Report includes independent commodity price forecasting and analysis for key agricultural outputs, an overview of the agribusiness competitive landscape and a discussion of the downstream context of agricultural production in relation to country food consumption forecasts and composite food and beverage trade forecasts.
- Use BMI's independent industry forecasts to test other views - a key input for successful planning in dynamic agribusiness markets.
- Apply BMI's medium-term commodity price analysis to assist with budgetary planning and the identification of investment opportunities and potential risks.
- Assess the activities and market position of your competitors, partners and clients.
BMI Industry View
Summary of BMI’s key industry forecasts and views, highlighting recent changes and key risks to the industry outlook.
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the wider agricultural industry.
BMI Supply & Demand Forecasts
Divided into sections based on various diverse sectors in the agriculture market, the chapter provides insight into each market’s agricultural industry, centred on sector forecasts to end-2019 for the consumption, production and trade of key commodities.
- Consumption Forecasts: Accompanied by a discussion of the main drivers of consumption growth: macroeconomic factors, food processing trends, price movements and increasingly, demand from the non-food sector.
- Production Forecasts: Examine the trends influencing BMI’s production outlook: global demand, price increases, public and private sector investment and agricultural efficiency improvements.
- Trade Forecasts: Accompanied by a discussion of the factors influencing a country’s trade in agricultural goods, including domestic demand, global prices and government trade policies.
- BMI’s Forecasts: Accompanied by a risks-to-outlook assessment, which examines potential factors that could affect our existing forecast picture and the likelihood of their occurrence.
BMI’s Commodity Price Analysis
Fundamental and technical analysis of the short- and medium-term price outlook for eight agricultural commodities based on globally recognised benchmarks.
Analysis of headline food and drink forecasts, including total food consumption, per capita food consumption and total sector trade, which provide important downstream intelligence for primary agricultural producers.
Includes relevant articles from BMI’s daily analysis service. These can include: long-term projections on agricultural imports and exports; our perceptions of the impacts of economic slowdown on key companies and subsectors within the Agribusiness industry in a given country; our analysis of fertilizer production; as well as other relevant analysis of recent news and events.
The reports contain information on prominent companies operating in each market.
Key Commodities Covered By The Agribusiness Market
Reports Include: Grains, Dairy, Livestock, Rice, Sugar, Palm Oil, Edible Oils, Coffee, Cocoa, Cotton, Soybean
Please note – not all reports cover all commodities.
The Agribusiness reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.