Although some people are optimistic that international dairy prices will rise soon, plenty of forecasters offshore predict still rising supply bringing price restraint, including the US Department of Agriculture which sees no improvement before 2019. Forecasts of rising demand over the long-term remain as robust as ever – but forecasts of supply changing are also as lacking as ever and if you don’t forecast both you can’t reasonably forecast prices.
The weak dairying outlook, low inflation, and continuing wobbles offshore mean further monetary policy easing is likely in NZ. But with our economy looking robust in spite of dairy sector weakness the NZ dollar is likely to remain strong. We look this week at how the NZD sits currently compared with 20 year averages.