Jamie Mackay: The Country host on the projected dairy prices for 2025/2026

The global dairy market is expected to face a period of weaker commodity prices off the back of a growth-filled 2025.

According to Rabobank's Q4 Global Dairy Quarterly Report, global milk production growth is estimated to have peaked in Q3 2025.

The Country's Jamie Mackay explained further. 

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Episode Transcript

Speaker 1 (00:01):
The Rural Report on Hither Duper see Allen Drive, Jamie
McKay's with Us host of the Country, Jamie, Good Evening,
Good day, Ryan. So is a nine dollars milk price
on the cards for twenty five twenty six? What do
we think? Well, it's not what I think or you really, Ryan,
it's probably what the experts think. And having just read
and reviewed the Rabobank Q four Global Dairy Quarterly Report,

(00:26):
a one sentence hit me right between the eyes. This
was authored, by the way, by Emma Higgins, who's their
senior ag analyst. She wrote, there is elevated risk that
the farm gate milk price moves lower across the course
of the season, which would mean that the final season
payout lands around the nine dollars per kilogram of milk

(00:47):
solid mark. So that's not a great number when we
started the season with a ten dollar fore cast. Of course,
Fonterra has since trimmed that to nine dollars fifty. But
if it gets down to nine dollars, well, you know,
the margins are getting a bit skinnier there. Because yesterday
Dairy and Z came out with their Econ tracker, which

(01:08):
is their tool for working out how much it costs
to produce milk, and they're saying the break even price
is eight fifty. So you know, look, ten dollars is great,
Nine dollars fifty is okay. Nine dollars jury's out a
wee bit on that one. We've still got a long
way to go. But the reason all this has happened, Ryan,
and this is in the Global Dairy quarterly report as well,

(01:28):
is because of stunning that's the word they've used, stunning
global milk production growth across the second half of twenty
twenty five. Right around the world, the EU and e
K and UK should I say, have posted their strongest
growth since twenty seventeen. For the month of October, US
milk flows posted their fifth consecutive month of growth rates

(01:52):
over three percent. Here in New Zealand, we're tacking along
at about three point four percent ahead of where we
were last year. The Big seven, that's the EU, the US, US, Australia, Brazil,
Argentina and Uruguay forecast to finish twenty twenty five up
two point two percent year on here. So the guts
of it all, Ryan, is, you know, the milk price

(02:14):
has gone up. People around the world, especially in places
like the States where grain prices are low, have just
moved their production from feeding stuff to feeding other stuff,
basically dairy cows, and therein lies the problem and then
all the milk comes on tap. Now our national lamcrop
for this season is up a bit on the previous Yeah,

(02:37):
this is sort of a this is a really good
news story, to be honest, Ryan, if you remember back
and you're far too young to remember back to the
nineteen eighties, but when Rob Muldoon was in power and
we had farming subsidies on a national sheep flock peaked
at about over seventy million. Now we've got about twenty

(02:57):
three million, twenty three or twenty four million, so we're
well more than half. But the national lamb crop is
going to be nineteen point six six million according to
the Beef and Lamb New Zealand latest lamb crop Report.
That's up about two hundred thousand lambs on last season.
But the good news part of the story is a
the lambing percentage has improved a whole lot one hundred

(03:20):
and thirty one point one percent average across the country.
That's amazing when you consider some of the land that
they're farming on with these sheep sheep farms, and that's
off the back of one point nine percent reduction and
breeding you numbers. So the number of lambs processed is
probably going to be in line with last year, which
was down a million on the year before. And part

(03:42):
of the reason for that is even though we've got
more lambs, we're only going to process about the same amount.
That's because some of those lambs born are going to
be retained as you lambs to rebuild the breeding flock.
Global lamb supply remains constrained, supported by an expected five
point eight percent reduction in Australian lamb export availability and

(04:06):
continued low New Zealand supply. The guts of all this
is that farm gate prices are at historically high levels
and probably will remain there at least for this season.
Here's the final number for you, Ryan, lamb is now
eleven dollars a kilo. Milk or milk price could be

(04:27):
as low as nine dollars a kilo. It's not often
that lamb exceeds, deary, it's a while since we've seen that,
So watch this space certainly will Jamie. Thank you for that.
Jamie McKay, host of the Country Here on news Talk
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