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Chart o’ the day: trouble brewing

Written By: - Date published: 10:35 am, July 22nd, 2011 - 13 comments
Categories: exports, farming - Tags:

Another big fall in dairy prices overnight. Yet the dollar keeps breaking record highs.

13 comments on “Chart o’ the day: trouble brewing”

  1. higherstandard 1

    Doesn’t Fonterra sell milk powder/products in $US – shouldn’t your graph be dariy auction prices $US per tonne ?

    • Akldnut 1.1

      Does it matter – the result would be the same no matter what the currency!

    • Lanthanide 1.2

      Actually that’s the point. The NZ has appreciated so fast so quickly that the returns in $NZ has dropped.

    • Blighty 1.3

      that’s the fucken dumbest thing I’ve read in weeks.

      We buy and sell things in New Zealand, what matters to us is the price in NZD, not USD.

      According to Hickey, the USD price has fallen 20% and the NZD has risen 14% since March
      http://www.nzherald.co.nz/business-editors-picks/news/article.cfm?c_id=1501981&objectid=10739906

      Combined, that’s a 31% fall in the currency that matters to us.

      • higherstandard 1.3.1

        Not at all blighty the most useful graphical representation is as on the site below

        Which gives a view which removes the kiwi dollar from the equation and takes into account the volumes being pumped into the market.

        http://www.agprodecon.org/node/36
        http://www.nzxfutures.com/system/dairy_reports/reports/165/original/The%20Dairy%20Trader%2020110720.pdf?1311108012

        • McFlock 1.3.1.1

          Um – I take it that they only use US$ in Mataura or Taranaki?

          I agree with Blighty – the money that NZ suppliers get for milk is a function of both the global price and the exchange rate back into NZ$. It does us no good it it stays overseas.

        • mik e 1.3.1.2

          Lowerstandard DOES that mean steadily declining returns for your commodity, I have talked to many farmers over the years and whenever it reaches a peak they think this will go on forever. but with commodities what goes up must come down and they think i,m an idiot but you just look at both charts and you will see that it basically is a roller coaster . So until farmers start making some giant leaps forward or hell of a lot of small ones the Future is always going to be the same th roller coaster , and with price oil{a finite resource] continuing to rise it ain,t going to be pretty!Fonterra has to increase its R&D hugely up to 2or3% to reduce cost of production and transport and to make more leaps forward.This govt cut research for 2years then reinstated it at half the rate a really dumb move. for research to be effective you need consistantly long term funding even Muldoon recognized that.Douglas and English have mucked that up Badly.Now the Reserve Bank GOVENATOR will speed up that decline for the productive sector. The solution increase savings to take money out of the economy as well as increase taxes to pay of debt [REDUCE TAX WHEN THE DEBT IS PAID or inflation is low] the dollar will fall and we will keep our money instead of exporting it to the big four Aussie banks, so you can see why this govt is getting corporate hospitality dished up to them by these banks and their following their failed formula ,while the productive sector is on their treadmill.

  2. vto 2

    Yep, things always go volatile just before meltdown.

    Got all your money under your mattresses folks?

    • mik e 2.1

      GOLD is where its at a finite resource. Unlike farm produced commodities. Oil is another finite resource thats also going up and staying up. lowerstandards lack of economic understanding,Oil is a very large input into farming and the transporting of their commodities Also agrichemicals , and now oil has take over the mantel of speculation from the US dollar,Farmers are going to be caught out because their leaders have continually taken research and development for granted. Especially the right wing govts of recent times . They have kept cutting and restructuring research,Fonterra has continually under spent on research so we are still mainly selling commodities instead of high value products which don,t need as much oil to move around.

  3. Bored 3

    Oh goody, the buggers might go bust before they completely feck up the rivers….I commented a few days ago about the fall in dairy prices and the likely result of too much leverage (borrowing). farms for sale, be fast, going sheep.

  4. Colonial Viper 4

    Looks like a 28% drop in dairy prices in just 4 months. Whoah. Not good.

    And if NZD/USD has strengthened in that time that’s an additional hit of a few %.

    BTW, USD is on the path to collapse, wait until they announce QE3.

  5. Afewknowthetruth 5

    If the Kiwi dollar remains around current levels (or goes higher) the tourist arrivals graph will look similar.

  6. Bazar 6

    “Another big fall in dairy prices overnight. Yet the dollar keeps breaking record highs.”

    And the graph represents payouts of dairy products in NZD.

    What a horrible statement to use with that graph.
    The graph would show a down turn even if international dairy prices remained the same, as the NZD is increasing in value.

    As was pointed out in another statement, its better to show it in another currency, if your going to compare it to the NZD.

    Or at least compare the value of the NZD along with the value of Milk products, so we can see the differential outselves.

    As was posted by higherstandard, http://www.agprodecon.org/node/36 shows a far more better graph.
    A quick glance will also show that milk prices have dropped the last 4 months due to increased milk supply.

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