New Zealand Milk Production Update – Aug ’15
According to Dairy Companies Association of New Zealand (DCANZ), Jun ’15 New Zealand milk production increased 8.1% YOY. Monthly production declined to seasonal lows throughout the month, however, finishing down 80.9% MOM on a daily average basis. New Zealand milk production typically reaches its seasonal low in June, with monthly production accounting for less than 1.0% of total annual production, so changes in production within the month have a minimal impact on changes in annual production. 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 late May ’15, Fonterra revised its forecasted Farmgate Milk Price for the ’14-’15 season from $4.50/kgMS to $4.40/kgMS, noting the over-supplied world markets and continued good growing conditions in most dairy producing regions. The reduction in the forecasted Farmgate Milk Price was the fifth experienced in the past 12 months. Fonterra’s opening forecast Farmgate Milk Price for the ’15-’16 season of $5.25/kgMS was $0.85/kgMS, or 19.3%, above the current ’14-’15 forecasted price. Fonterra is widely expected to lower their forecasted Farmgate Milk Prices once again during the next board meeting occurring in early August as global dairy prices continue to decline. 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 late August and September. Fonterra will release August collection figures in early October and official DCANZ data will become available in the middle of October.