The price of New Zealand dairy farms eased amid concerns
over the return of some dryness, real estate professionals said, as US
officials cautioned over the potential for a drop in milk prices too.
The price of New Zealand dairy farms was 2.9% lower in the
three months to January than in the October-to-December period, the Real Estate
Institute of New Zealand (Reinz) said.
Prices were still up 7.8% year on year. However, this
represented an underperformance compared with average New Zealand farm prices,
up nearly 10%.
The decline was attributed in part to ideas of
profit-taking, most notably by investors in the Canterbury area on the north
east of South Island.
"The dairy farm market in Canterbury has reached a plateau,"
the institute said, highlighting that "some syndicates are taking the
opportunity of capitalising on their extensive development work".
'Hint of caution'
However, the institute also highlighted some concerns over
fresh dryness in Waikato, in the north of North Island, where a "hint of caution
is emerging as dry conditions impact on" central areas.
Separately, the US Department of Agriculture bureau in
Wellington highlighted that rainfall had proven below average in both Waikato
and Canterbury this year, touching a raw nerve after drought early in 2013 sent
overall New Zealand milk production falling.
And the bureau highlighted the potential for a retreat in
milk prices next season from the record levels that many processors are
planning to pay out for 2013-14, which ends in May, boosted by bumper Chinese imports.
"Commentators are warning that the milk solids price for
2014-15 is very unlikely to be as high as this year," the bureau said, adding
that such expectations meant that "most farmers will be fairly careful when it
comes to purchasing feed".
bureau raised by 628,000 tonnes, to a record 21.20m tonnes, its forecast for New
Zealand's milk production in calendar 2014, an increase of 5.7%,
Reinz added that volumes of sales of farms overall in New Zealand
had increased in the November-to-January period to 1,794, the highest in nearly
"The increase in sales volumes for the three months to the
end of January is an indication of the positive mood prevailing throughout the
rural sector", said Brian Peacocke, the institute's rural spokesman.
"Most regions are seeing solid demand" for livestock