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  1. #321
    Speedy Az winner69's Avatar
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    Quote Originally Posted by Daytr View Post
    Yep I agree JB & I think many have underestimated the hit to the NZ economy that is coming.
    Still a little way off though I suspect.
    I posted this link to this analysis a while ago. Counterintuitively falls in dairy prices don't appear to stuff the economy. But with x-rate its the traders who rule by creating as much as noise as possible.by reacting to any snippet of econ info.

    http://www.sra.co.nz/pdf/DairyPricesAug14.pdf


    A couple of extracts -


    Since 1992 there have been seven significant falls in dairy product prices including the latest fall and in only one of these was there are recession and this was when the financial crisis struck in 2008/09 and had a major negative on a number of things
    .

    And


    Interestingly, between 1992 and 2007 the correlation between dairy product price inflation and annual GDP growth was -0.45 ........All of the five significant falls in dairy product prices prior to 2008 coincided with above average economic growth.
    Last edited by winner69; 03-06-2015 at 02:41 PM.

  2. #322
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    Farmers would be loving it if they were going to get the $6/kg in the article, but instead they are going to get $4.40.
    So that $4.5Bln+ is now a lot +++ more likely over $7Bln.
    There will be farmers that go to the wall on this, how many will depend on if & when the price recovers, however NZ is now one of the most expensive producers of dairy product in the world because of intensification & dairy conversion on unsuitable land.
    Will it cause a recession? Who knows, but I prefer to look at current facts rather than relying on what happened in the past.

    I would suggest this is by far the biggest fall in dollar value & [perhaps percentage terms for dairy. In dollar terms for any export market in NZ.
    In relative dollar terms it would be similar to the wool glut of the late 70s or something similar.
    The purse strings in places like the Waikato are already drying up & it will impact a hell of a lot more than just farm buildings.
    Importing of feed, new machinery, fertilizer, wages among others will be first things to be wound back.

    Its a cliché, but its different this time, as previously we haven't had the conversion of so many farmers to dairy as we have seen in recent years. We now have a dairy industry in sheep heartlands of the Hawkes Bay and Canterbury. So its more wide spread & the price fall much bigger.
    Hopefully you find my posts helpful, but in no way should they be construed as advice. Make your own decision.

  3. #323
    Member Pumice's Avatar
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    Quote Originally Posted by Daytr View Post
    I jobbed out last night for 3/4 of a cent profit & then reset entry level and now back in again.
    I still think short term the Kiwi will strengthen against the Aussie.
    AUD raced away after their strong GDP result. Still optimistic for the NZD V AUD?
    Shorting NZD/USD seems an easier play to me.

  4. #324
    Speedy Az winner69's Avatar
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    Quote Originally Posted by Daytr View Post
    Farmers would be loving it if they were going to get the $6/kg in the article, but instead they are going to get $4.40.
    So that $4.5Bln+ is now a lot +++ more likely over $7Bln.
    There will be farmers that go to the wall on this, how many will depend on if & when the price recovers, however NZ is now one of the most expensive producers of dairy product in the world because of intensification & dairy conversion on unsuitable land.
    Will it cause a recession? Who knows, but I prefer to look at current facts rather than relying on what happened in the past.

    I would suggest this is by far the biggest fall in dollar value & [perhaps percentage terms for dairy. In dollar terms for any export market in NZ.
    In relative dollar terms it would be similar to the wool glut of the late 70s or something similar.
    The purse strings in places like the Waikato are already drying up & it will impact a hell of a lot more than just farm buildings.
    Importing of feed, new machinery, fertilizer, wages among others will be first things to be wound back.

    Its a cliché, but its different this time, as previously we haven't had the conversion of so many farmers to dairy as we have seen in recent years. We now have a dairy industry in sheep heartlands of the Hawkes Bay and Canterbury. So its more wide spread & the price fall much bigger.
    Good points. I will reflect on them

    But interestingly the current $4.40 plus 20-30 cents dividend is the average payout from 2000 to 2007. Prices are only reverting to the average after a period of boom times and high prices.

    I wonder where the 'excessive' profits have gone over the last few years? I would hazard a guess a lot has not "trickled down" into the towns and cities. This a lot of the touted billions that is being taken out of the economy was never there in the first place.

  5. #325
    El Toro~
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    Very happy I picked up some ASX stocks when it was around 0.99. Sold out entirely of HNZ @ $1.31 and move it all across to ASX holdings, sitting on a nice wee currency buffer at the moment. All eyes will be on the RBNZ announcement next week.

  6. #326
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    Yeah it certainly did & I stopped myself out & re-entered at half a cent higher.
    I don't think the RBNZ will drop rates next week, but its possible.

    Quote Originally Posted by Pumice View Post
    AUD raced away after their strong GDP result. Still optimistic for the NZD V AUD?
    Shorting NZD/USD seems an easier play to me.
    Hopefully you find my posts helpful, but in no way should they be construed as advice. Make your own decision.

  7. #327
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    They are reverting to a mean, but meanwhile costs aren't other than fuel. As I said NZ has become one of the most highest cost producers of dairy in the world for a large scale producer & this wasn't the case 10 years ago. Dairy land values has probably doubled in that time as well.
    Well farmers, the better ones at least, rightly so use those billions to pay off debt & save for a rainy day. Well its raining.
    Logs are obviously down as well, however beef & lamb prices are doing well.
    The problem with the dairy conversions is that the capital outlay is high so its not like they can just switch back, well they can, if they can afford the stock, but the capital outlay or debt still remains.

    Quote Originally Posted by winner69 View Post
    Good points. I will reflect on them

    But interestingly the current $4.40 plus 20-30 cents dividend is the average payout from 2000 to 2007. Prices are only reverting to the average after a period of boom times and high prices.

    I wonder where the 'excessive' profits have gone over the last few years? I would hazard a guess a lot has not "trickled down" into the towns and cities. This a lot of the touted billions that is being taken out of the economy was never there in the first place.
    Hopefully you find my posts helpful, but in no way should they be construed as advice. Make your own decision.

  8. #328
    FEAR n GREED JBmurc's Avatar
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    Quote Originally Posted by snapiti View Post
    In some area's dairy farmers were paying more per hectare than the lifestyle block buyers.
    Which has lead to many farmers taking on way too much debt ....how many years can the average Dairy farmer survive at current losses ..guess we will find out in time
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

  9. #329
    Speedy Az winner69's Avatar
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    Traders (who want noise and plenty of it) and bank economists / commentators (no doubt for selfish reasons) calling for OCR cut this week

    Will Wheeler be a wimp and give in to their 'demands'? Hope not


    Guy on radio this morning said if not rate cut Thursady NZD will spike up, maybe as much as 3 cents

  10. #330
    Speedy Az winner69's Avatar
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    Quote Originally Posted by snapiti View Post
    wheeler has got what he wanted by jaw boning the Kiwi $ down........absolutely no show now of a rate cut....the $ will bounce.......... trading to it
    But we have even reached the stage where in those bank commentary things some are even suggesting what Wheeler could say ...Westpac in particular suggesting the paragraphs he writes. Weird.

    They are desperate .....Wheeler will bow to popular opinion which has a rather myopic view of the situation. Ans snaps will lose money on this trade.

    And in a couple of years time we will have interest rates much higher than they needed to be.

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