New Zealand Milk Production Update – Dec ’14
According to Dairy Companies Association of New Zealand (DCANZ), Oct ’14 New Zealand milk production continued the recent trend of production growth, increasing 4.5% YOY. The YOY monthly gain was the 15th in a row, but tied with Aug ’14 as the lowest YOY gain in 11 months. Oct ’14 production remained 9.5% higher than the three year average October production and 16.1% higher than the five year average October production. New Zealand typically reaches peak production in the month of October, with October accounting for nearly 15% of total annual production over the past five years. ’14-’15 YTD New Zealand milk production is up 4.9% YOY through the first five months of the production season. Lower farmgate milk prices are expected to temper future production gains. Fonterra revised its forecasted farmgate milk price for the ’14-’15 season in September from $6.00/kgMS to $5.30/kgMS, noting increased volatility in international dairy commodity prices and further downside price risk. Fonterra is likely to further reduce their farmgate milk price to sub $5.00 levels as international dairy prices continue to decline in recent GlobalDairyTrade auctions. Fonterra is expected to revise its milk price forecasts after its board meeting in early December. According to USDA AMS, producers may refrain from supplemental feeding, given the lower farmgate prices. Favorable weather conditions and pasture growth have continued through the middle of November, although the South Island has received some cold weather which has restricted production gains in some areas.