New Zealand Milk Production Update – Sep ’15
According to Dairy Companies Association of New Zealand (DCANZ), Jul ’15 New Zealand milk production increased 13.8% YOY. Monthly production increased 46.1% MOM on a daily average basis off of the seasonal lows reached in June but remains at insignificant levels when compared to total annual production levels. New Zealand milk production was tempered throughout the first quarter of 2015 due to low Farmgate Milk Prices and dry conditions. More recently, soil moisture levels have been restored to near normal levels, particularly on New Zealand’s North Island, although Farmgate Milk Prices continue to remain weak. In early Aug ’15, Fonterra revised its forecasted Farmgate Milk Price for the ’15-’16 season from $5.25/kgMS to $3.85/kgMS, a ten year low, noting the continued imbalance in supply and demand within global dairy markets. A $0.50/kgMS support payment to farmers was made available by Fonterra in hopes of boosting cashflows and farm confidence, however the support payments may delay or slow the dairy price recovery within the largest dairy exporting nation. The support payments made will be interest free for two years and paid back when the Farmgate Milk Price or Advance Rate goes above $6.00/kgMS. New Zealand milk production typically peaks in October and gradually declines until seasonal lows are reached in the Northern Hemisphere summer months. Over the past five years, May – July production has accounted for less than 5.0% of total milk produced. Meaningful production data will be limited until anecdotal information of August production figures is released throughout the remainder of September. Fonterra will release August collection figures in early October and official DCANZ data will become available in the middle of October.