Westpac senior agri-economist Nathan Penny said Chinese demand for New Zealand goods, such as dairy, meat and forestry, had been more subdued than hoped.
The lifting of Covid-19 restrictions fired an initial strong rebound but the latest economic data out of China shows growth has slowed with manufacturing activity, retail sales and industrial output all shrinking.
Dairy prices fell 0.9 percent in the latest global dairy trade auction, with South East Asia/Oceania customers the biggest buyers.
“North Asia was buying, but definitely not in a way that implies ‘China is back’,” NZX analysts said.
Sluggish demand, coupled with New Zealand’s limited capacity to produce more cheese and take advantage of high global cheese prices, saw Westpac cut its milk price forecast for the 2023-24 season to $8.90 per kilogram of milk solids.
Fonterra and Synlait Milk have also reduced their forecast milk prices for the current season.
Penny said demand was expected to pick up again, though later than some would have liked.
Forestry exports were expected to take even longer to recover, with demand not expected to pick up again until next year, owing to depressed domestic demand.
Credit: radionz.co.nz
