Westpac New Zealand Economic and Sustainability Strategy Update
Agriculture
New Zealand's commodity prices have increased 17% so far this year, and
Westpac Economics expect a further lift of circa 5% through to the September
quarter
Strong Chinese demand, the firming in the global growth outlook and tight
global agricultural supply bodes well for the remainder of 2021
Dairy: Westpac Economics' farmgate milk price forecast for the soon to be
completed 2020/21 season is $7.90/kg (following $7.14/kg milk price in
2019/20). Westpac Economics' forecast is at the upper end of Fonterra's
forecast range of $7.30-$7.90/kg. For 2021/22, Westpac Economics expect a
similarly strong farmgate milk price of $8.00/kg
Farmers continue to repay debt, however the strong outlook for agricultural
incomes is prompting more investment activity both on and off farm
450
400
350
300
250
200
150
100
50
0
2001
NZ commodity price index (World Prices)
Index = 100 in 1986
⚫Dairy
2003 2005
2007
Source: ANZ, Westpac Economics
-Forestry products
Meat, skins and wool
T
2009 2011 2013 2015 2017 2019 2021
Farmgate Milk Price
450
400
350
300
250
200
150
100
50
0
KgMs
$10
KgMs
Forecast
$10
$8
$8
$6
$6
$4
$4
$2
$2
$0
T
$0
2006
2008
2010
2012
2014
Year ending May
2016
2018
2020
2022
Source: Fonterra, Westpac Economics
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