ANALYSIS - A three month milk production and price forecaster, designed by the New Zealand stock exchange, is one of the latest tools dairy farmers have in coping with market volatility.
The new ‘ground breaking’ online facilities, created in partnership with Massey University, aim to translate world dairy prices instantly and predict New Zealand’s milk output for the upcoming three months.
Launched this October, the Milk Production Predictor and Farmgate Milk Price Calculator will create more marketplace transparency, according to NZX chief executive Tim Bennett.
He added that good information is valuable for the dairy sector and the tool amasses vast quantities of science and finance data.
The announcement follows a peak and trough cycle in dairy prices that has sparked debate into how farmers can cope with an increasingly globalised market and rapid changes in dairy values.
Talk of more forward selling contracts, farm savings accounts and vamping up competitiveness have been guiding farmers into ways of providing a buffer to withstand tough times.
Futures contracts, utilised by around 20 per cent of US farmers, offer a flexible way to work at a stable price.
In the case of forward selling, Irish adviser Tadhge Buckley has told Irish farmers that: “You cannot beat the market, but you can make the ride less bumpy.”
A similar market intelligence facility to the NZX tool, started on 16 April this year, is the European Milk Market Observatory.
Its timing coincides with next year’s quota abolition and much speculation of how farm output will increase going forward and has been welcomed by producers.
Free of charge, the observatory offers data analysis and regular markets updates.
Short and medium term outlooks; prices and margins updates and trade summaries form the basis of an information centre seeking to closely track dairy production and demand.
Being informed in this way ensures an ‘efficient market’, said Massey University Professor Nicola Shadbolt at the unveiling of the new NZX forecasters.
“The global dairy market will always be volatile,” she added. “These tools will help the dairy sector operate with greater immediacy and accuracy than ever before.”
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