May 11, 2026 • 6 mins
Rabobank’s Senior Ag Analyst reviews the bank’s May Agribusiness Monthly Report as we look at the prospects for dairy, beef, sheep, fuel, fertiliser, plus interest and exchange rates.
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Speaker 1 (00:00):
Her name is Emma Higgins. She's a senior ag analyst
or Rabobank. They've just come out with their May Agribusiness monthly. Now, Emma,
because it's dairy week here on the country, let's start
with the biggest game in town, dairy. And your headline
here is dairy markets will find a floor in twenty
twenty six.
Speaker 2 (00:21):
Yeah, so big kedding, isn't it. When we've got a
lot of dynamics happening right now which suggests a bit
of divergence across the dairy complex. I think let's start
at the top. Right. We have had a lot of
milk being produced in New Zealand for the twenty five
to twenty sixth season and look that might continue into
the new season as well. But so far we've had
(00:42):
a standout for March, which is the latest numbers being
produced with milk production volumes at almost ten percent yearinyar
for that month, So stand out there. That's flowing through
into the broader story that we talked about for a
while now, Jmie, which is global milkspayer remains abundant. Now,
this is the case also in the Northern Hemisphere, and
(01:03):
this is what's leading to a bit of a divergence
across the dairy complex when we think about the GDT
results and we think about how butter has trended versus, say,
for example, of skim milk Potter. So there's a lot
of preme availability sitting out in Europe and also in
the United States as well, and that supply is being
(01:24):
tuned into butter. It's comfortably exceeding demand and that's placing
downward pressure on prices. New Zealan's not been immune to this,
and that's why our butter prices have melted by around
thirty percent compared to last year, where we were sitting
about eight thousand newest dollars per ton mark. On the
flip side, skimut Potter absolute star of the stables. The
(01:48):
protein markets are telling a very different story to fat.
Our protein demand globally has been much more resilient. There's
a lot of good trends supporting that, and so skimmit
patter basically benefiting from this and that's helping underpin price
forecasts where they are today.
Speaker 1 (02:06):
Yep, we've got a lot to be thankful for in
terms of overweight Americans and their white loss drugs. Now
is that same demand as ravenous for protein, for instance,
from beef.
Speaker 2 (02:18):
Well interesting you say that. Look right now, the beef
markets have remained pretty well supported over the last couple
of months, and that's been the story that we've spoken
to for a while now. I guess on the front
of it, what's helping on the price side of things
right now is that we've had a lot less through
put coming through. Started to see some of that start
to trend across as we've moved through the autumn months,
(02:41):
but broadly prices are still really supported. We know that
the global beef supply, if reflect to global, is expected
to run quite tight across the course of this year,
so less beef supply tends to point to stronger beef
prices here in New Zealand, particularly when we're thinking about
again that key market the United States. So all in all,
(03:02):
it's looking like another good season ahead for beef. The
one thing we need to keep on our radars is
what might be happening with China when it comes to
their beef import safeguards might just steady the flow there.
But all in all, things are looking pretty nice for
the beef guys.
Speaker 1 (03:17):
What about sheep? Still tight supply out there. It's a
supply and demand equation and as it stands at the moment,
the markets look pretty stable and can I say positive
for lamb and mutton.
Speaker 2 (03:30):
Absolutely, let's go with that, because you're right, we've got
really great dynamics which have supported our sheep farmers here
in New Zealand tight supply, and we've had actually diversified
export demand as well. If we think about we have
been shipping our volumes to We've had about a third
over the six months of this season head across to
China and about a quarter over into the EU. And
(03:52):
some of these markets are really high value as we know,
particularly with the twenty percent heading across to the UK
and the US as well. So all and all, looking ahead,
demand seems to remain quite robust across the course of
this season, and you know we'll be subject to the
usual timing and volume issues that we tend to see
for farm gate prices, but as you say, dynamics are
(04:13):
still supportive commodity outlooks.
Speaker 1 (04:16):
We're having a look at these in the Rabobank Agribusiness
Monthly for the month of May. Fertilizer and fuel not good.
Speaker 2 (04:25):
I think it's the talking point amongst everyone, right, you know,
there is no way of getting around this. What is
happening right now globally and particularly our the Middle East
is having ramification tier in New Zealand at the moment.
You know, global urear prices are continuing to raise. We've
seen the biggest leap already occur, certainly after the immediate
aftermath of the Golf War three, but they're still continuing
(04:47):
to remain elevated and ticking upwards as well. Look, a
lot depends on the Strait of Hamas and when it's
going to reopen and how we'll start to see some
of that supply starting to feed through into global market.
At this point in time, our forecast is for the
next couple of weeks, hopefully some positive response to come through.
(05:07):
But look, Jamie, I mean overnight every night. I think
the dynamics are always changing, and it's you know, we're
trying to get a handle on what's going on and
what that might mean for all of these really important
commodity inputs for our New Zealand partial systems.
Speaker 1 (05:23):
No relief at the petrol pump or in the bulky
until such time as we get this one sorted. The
other interesting one that you look at and your commodity
outlooks are interest rates and exchange rates. Now the Aussies
have lifted their official cash right, we kept ours where
it was at als review. We're looking at it again
this month. What's Rabobank saying in terms of OCR lifts.
Speaker 2 (05:46):
We are still thinking that it's going to be unlikely
that we'll see a rate hike come through this month,
so we're sticking to our view that that will probably
emerge later on this year. And a lot of the
support really comes back to some of the sentiment that
the Reserve Bank has talked to in the past in
a public manner. So we'll wait and see what happens
(06:10):
at the end of this month's but for now we're
sticking to our view that it might be a little
bit later in the year and maybe October.
Speaker 1 (06:17):
What about foreign exchange, I know that we've strengthened against
the US dollar, Yes we have.
Speaker 2 (06:23):
We have, indeed, which is interesting right when we think
about globally what's going on and how that might impact
again on the input side of things. Look, ultimately, we
have seen that strengthening and we think that there will continue.
Taking that twelve month for you and our estimations right
now in our forecast is may be seeing a rally
towards that sixty two cent mark over the next twelve months.
Speaker 1 (06:45):
And I guess as an exporting nation, we could possibly
live with that. Every cloud has its silver lining. It
makes fuel a wee bit cheaper and fertilizer. Emma Higgins,
senior egg analysts for Rabobank, always appreciate your time on
the country.
Speaker 2 (06:57):
Thank you so much. Jeremy
Her name is Emma Higgins. She's a senior ag analyst
or Rabobank. They've just come out with their May Agribusiness monthly. Now, Emma,
because it's dairy week here on the country, let's start
with the biggest game in town, dairy. And your headline
here is dairy markets will find a floor in twenty
twenty six.
Speaker 2 (00:21):
Yeah, so big kedding, isn't it. When we've got a
lot of dynamics happening right now which suggests a bit
of divergence across the dairy complex. I think let's start
at the top. Right. We have had a lot of
milk being produced in New Zealand for the twenty five
to twenty sixth season and look that might continue into
the new season as well. But so far we've had
(00:42):
a standout for March, which is the latest numbers being
produced with milk production volumes at almost ten percent yearinyar
for that month, So stand out there. That's flowing through
into the broader story that we talked about for a
while now, Jmie, which is global milkspayer remains abundant. Now,
this is the case also in the Northern Hemisphere, and
(01:03):
this is what's leading to a bit of a divergence
across the dairy complex when we think about the GDT
results and we think about how butter has trended versus, say,
for example, of skim milk Potter. So there's a lot
of preme availability sitting out in Europe and also in
the United States as well, and that supply is being
(01:24):
tuned into butter. It's comfortably exceeding demand and that's placing
downward pressure on prices. New Zealan's not been immune to this,
and that's why our butter prices have melted by around
thirty percent compared to last year, where we were sitting
about eight thousand newest dollars per ton mark. On the
flip side, skimut Potter absolute star of the stables. The
(01:48):
protein markets are telling a very different story to fat.
Our protein demand globally has been much more resilient. There's
a lot of good trends supporting that, and so skimmit
patter basically benefiting from this and that's helping underpin price
forecasts where they are today.
Speaker 1 (02:06):
Yep, we've got a lot to be thankful for in
terms of overweight Americans and their white loss drugs. Now
is that same demand as ravenous for protein, for instance,
from beef.
Speaker 2 (02:18):
Well interesting you say that. Look right now, the beef
markets have remained pretty well supported over the last couple
of months, and that's been the story that we've spoken
to for a while now. I guess on the front
of it, what's helping on the price side of things
right now is that we've had a lot less through
put coming through. Started to see some of that start
to trend across as we've moved through the autumn months,
(02:41):
but broadly prices are still really supported. We know that
the global beef supply, if reflect to global, is expected
to run quite tight across the course of this year,
so less beef supply tends to point to stronger beef
prices here in New Zealand, particularly when we're thinking about
again that key market the United States. So all in all,
(03:02):
it's looking like another good season ahead for beef. The
one thing we need to keep on our radars is
what might be happening with China when it comes to
their beef import safeguards might just steady the flow there.
But all in all, things are looking pretty nice for
the beef guys.
Speaker 1 (03:17):
What about sheep? Still tight supply out there. It's a
supply and demand equation and as it stands at the moment,
the markets look pretty stable and can I say positive
for lamb and mutton.
Speaker 2 (03:30):
Absolutely, let's go with that, because you're right, we've got
really great dynamics which have supported our sheep farmers here
in New Zealand tight supply, and we've had actually diversified
export demand as well. If we think about we have
been shipping our volumes to We've had about a third
over the six months of this season head across to
China and about a quarter over into the EU. And
(03:52):
some of these markets are really high value as we know,
particularly with the twenty percent heading across to the UK
and the US as well. So all and all, looking ahead,
demand seems to remain quite robust across the course of
this season, and you know we'll be subject to the
usual timing and volume issues that we tend to see
for farm gate prices, but as you say, dynamics are
(04:13):
still supportive commodity outlooks.
Speaker 1 (04:16):
We're having a look at these in the Rabobank Agribusiness
Monthly for the month of May. Fertilizer and fuel not good.
Speaker 2 (04:25):
I think it's the talking point amongst everyone, right, you know,
there is no way of getting around this. What is
happening right now globally and particularly our the Middle East
is having ramification tier in New Zealand at the moment.
You know, global urear prices are continuing to raise. We've
seen the biggest leap already occur, certainly after the immediate
aftermath of the Golf War three, but they're still continuing
(04:47):
to remain elevated and ticking upwards as well. Look, a
lot depends on the Strait of Hamas and when it's
going to reopen and how we'll start to see some
of that supply starting to feed through into global market.
At this point in time, our forecast is for the
next couple of weeks, hopefully some positive response to come through.
(05:07):
But look, Jamie, I mean overnight every night. I think
the dynamics are always changing, and it's you know, we're
trying to get a handle on what's going on and
what that might mean for all of these really important
commodity inputs for our New Zealand partial systems.
Speaker 1 (05:23):
No relief at the petrol pump or in the bulky
until such time as we get this one sorted. The
other interesting one that you look at and your commodity
outlooks are interest rates and exchange rates. Now the Aussies
have lifted their official cash right, we kept ours where
it was at als review. We're looking at it again
this month. What's Rabobank saying in terms of OCR lifts.
Speaker 2 (05:46):
We are still thinking that it's going to be unlikely
that we'll see a rate hike come through this month,
so we're sticking to our view that that will probably
emerge later on this year. And a lot of the
support really comes back to some of the sentiment that
the Reserve Bank has talked to in the past in
a public manner. So we'll wait and see what happens
(06:10):
at the end of this month's but for now we're
sticking to our view that it might be a little
bit later in the year and maybe October.
Speaker 1 (06:17):
What about foreign exchange, I know that we've strengthened against
the US dollar, Yes we have.
Speaker 2 (06:23):
We have, indeed, which is interesting right when we think
about globally what's going on and how that might impact
again on the input side of things. Look, ultimately, we
have seen that strengthening and we think that there will continue.
Taking that twelve month for you and our estimations right
now in our forecast is may be seeing a rally
towards that sixty two cent mark over the next twelve months.
Speaker 1 (06:45):
And I guess as an exporting nation, we could possibly
live with that. Every cloud has its silver lining. It
makes fuel a wee bit cheaper and fertilizer. Emma Higgins,
senior egg analysts for Rabobank, always appreciate your time on
the country.
Speaker 2 (06:57):
Thank you so much. Jeremy
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