New Zealand Milk Production Update – Apr ’20
Executive Summary
New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Mar ’20. Highlights from the updated report include:
New Zealand milk production volumes have finished lower on a YOY basis over six of the past seven months through Mar ’20. ’19-’20 YTD milk production volumes have declined by 0.9% on a YOY basis throughout the first ten months of the production season however production on a milk-solids basis has increased 0.2% on a YOY basis throughout the period.
Farmgate Milk Prices
Fonterra farmgate milk prices reached a nine year low during the ’15-’16 production season as concerns over a potential El Niño event mounted while global milk supplies expanded significantly, particularly from within the EU-28. Fonterra farmgate milk prices rebounded throughout the ’16-’17 and ’17-’18 production seasons as a gradual rebalancing of global supply and demand took place, while Fonterra’s ’18-’19 final farmgate milk price forecast of $6.35/kgMS declined 5.1% from the previous production season but remained above break-even levels.
Fonterra’s current ’19-’20 farmgate milk price forecast of $7.00-$7.60/kgMS was raised by an average of $0.25/kgMS, or 3.5%, in Dec ’19 and is on pace to reach a six year high at the midpoint of the forecast. Fonterra noted recent Global Dairy Trade price appreciation and a favorable global supply and demand balance as drivers to the increase in forecasted pay prices. Fonterra reaffirmed the forecasted price in Apr ’20 but urged producers to exercise caution with on-farm decisions due to COVID-19 uncertainty. Fonterra’s current ’19-’20 farmgate milk price forecast has increased by a total of $0.55/kgMS, or 8.1%, since the opening forecast in May ’19. Fonterra will announce its opening ’20-’21 farmgate milk price forecast in late May.
Cow & Heifer Slaughter
New Zealand cow & heifer slaughter rates decline 8.0% on a YOY basis during Mar ’20 when normalizing for slaughter days, finishing lower on a YOY basis for the first time in the past nine months. Mar ’20 dairy cow & heifer slaughter, which has more limited historical data available, also declined on a YOY basis for the first time in the past nine months, finishing down 10.0%.
’18-’19 annual New Zealand cow & heifer slaughter rates declined 0.7% YOY while finishing 2.3% below three year average figures, however ’19-’20 YTD slaughter figures have rebounded by 5.6% throughout the first ten months of the production season and are on pace to reach a four year high level.
New Zealand milk production volumes increased at a compound annual growth rate of 4.2% over the ten year period ending during the ’14-’15 record production season but have trended flat-to-lower over the four most recent production seasons as farmgate milk prices declined from the ’13-’14 record high levels and the New Zealand milk cow herd was reduced. USDA is projecting the New Zealand milk cow herd will decline slightly on a YOY basis throughout 2020 but remain above the six year low level experienced throughout 2017.
- New Zealand milk production volumes declined on a YOY basis for the sixth time in the past seven months during Mar ’20, finishing down 1.9%. Production on a milk-solids basis remained higher on a YOY basis for the fourth time in the past five months, however, increasing by 0.1%.
- Fonterra’s current ’19-’20 farmgate milk price forecast of $7.00-$7.60/kgMS was raised by an average of $0.25/kgMS, or 3.5%, in Dec ’19 and is on pace to reach a six year high at the midpoint of the forecast. Fonterra reaffirmed the price forecast in Apr ’20 and will announce its opening ’20-’21 farmgate milk price forecast in late May.
- New Zealand cow & heifer slaughter rates declined 8.0% on a YOY basis during Mar ’20 when normalizing for slaughter days, finishing lower on a YOY basis for the first time in the past nine months.
New Zealand milk production volumes have finished lower on a YOY basis over six of the past seven months through Mar ’20. ’19-’20 YTD milk production volumes have declined by 0.9% on a YOY basis throughout the first ten months of the production season however production on a milk-solids basis has increased 0.2% on a YOY basis throughout the period.
Farmgate Milk Prices
Fonterra farmgate milk prices reached a nine year low during the ’15-’16 production season as concerns over a potential El Niño event mounted while global milk supplies expanded significantly, particularly from within the EU-28. Fonterra farmgate milk prices rebounded throughout the ’16-’17 and ’17-’18 production seasons as a gradual rebalancing of global supply and demand took place, while Fonterra’s ’18-’19 final farmgate milk price forecast of $6.35/kgMS declined 5.1% from the previous production season but remained above break-even levels.
Fonterra’s current ’19-’20 farmgate milk price forecast of $7.00-$7.60/kgMS was raised by an average of $0.25/kgMS, or 3.5%, in Dec ’19 and is on pace to reach a six year high at the midpoint of the forecast. Fonterra noted recent Global Dairy Trade price appreciation and a favorable global supply and demand balance as drivers to the increase in forecasted pay prices. Fonterra reaffirmed the forecasted price in Apr ’20 but urged producers to exercise caution with on-farm decisions due to COVID-19 uncertainty. Fonterra’s current ’19-’20 farmgate milk price forecast has increased by a total of $0.55/kgMS, or 8.1%, since the opening forecast in May ’19. Fonterra will announce its opening ’20-’21 farmgate milk price forecast in late May.
Cow & Heifer Slaughter
New Zealand cow & heifer slaughter rates decline 8.0% on a YOY basis during Mar ’20 when normalizing for slaughter days, finishing lower on a YOY basis for the first time in the past nine months. Mar ’20 dairy cow & heifer slaughter, which has more limited historical data available, also declined on a YOY basis for the first time in the past nine months, finishing down 10.0%.
’18-’19 annual New Zealand cow & heifer slaughter rates declined 0.7% YOY while finishing 2.3% below three year average figures, however ’19-’20 YTD slaughter figures have rebounded by 5.6% throughout the first ten months of the production season and are on pace to reach a four year high level.
New Zealand milk production volumes increased at a compound annual growth rate of 4.2% over the ten year period ending during the ’14-’15 record production season but have trended flat-to-lower over the four most recent production seasons as farmgate milk prices declined from the ’13-’14 record high levels and the New Zealand milk cow herd was reduced. USDA is projecting the New Zealand milk cow herd will decline slightly on a YOY basis throughout 2020 but remain above the six year low level experienced throughout 2017.