Executive Summary

New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Mar ’21. Highlights from the updated report include:

• New Zealand milk production volumes increased 9.8% on a YOY basis during Mar ’21, reaching a three year high seasonal level. The YOY increase in New Zealand milk production volumes was the tenth experienced throughout the past 11 months and the largest experienced throughout the past two years on an absolute basis.
• Fonterra’s ’20-’21 farmgate milk price forecast of $7.30-$7.90/kgMS was revised $0.40/kgMS higher throughout Mar ’21 on strong Chinese and Southeast Asian powder demand. The ’20-’21 farmgate milk price forecast is on pace to reach a seven year high level at the midpoint of the estimate.
• New Zealand cow & heifer slaughter rates declined 1.2% on a YOY basis during Mar ’21 when normalizing for slaughter days, finishing lower for the third consecutive month.

Additional Report Details

Milk Production

According to Dairy Companies Association of New Zealand (DCANZ), Mar ’21 New Zealand milk production volumes increased 9.8% on a YOY basis, reaching a three year high seasonal level. On a milk-solids basis, production increased 8.7% YOY, finishing at a four year high seasonal level.

The Mar ’21 YOY increase in New Zealand milk production volumes was the tenth experienced throughout the past 11 months and the largest experienced throughout the past two years on an absolute basis. ’19-’20 annual milk production volumes declined 0.7% on a YOY basis as drought conditions impacted the milk supply however production on a milk-solids basis increased 0.3% YOY throughout the period. ‘20-’21 YTD New Zealand milk production volumes have rebounded by 2.1% on a YOY basis throughout the first ten months of the production season, with production on a milk-solids basis up 2.0%.

Rainfall & Soil Moisture Deficits

Mar ’21 New Zealand rainfall volumes rebounded to a three year high seasonal level when weighted regionally by milk production volumes, finishing 25.9% above previous year levels. Rainfall levels finished 18.4% above 20 year average seasonal levels for the month of March.

Rebounding rainfall levels experienced throughout the month of March contributed to soil moisture deficits declining seasonally from the 12 month high level experienced throughout the previous month. Mar ’21 New Zealand soil moisture deficits finished 7.6% lower on a YOY basis but remained 14.1% above 20 year average seasonal levels for the month of March.

Farmgate Milk Prices

Fonterra’s farmgate milk price reached a six year high level of $7.14/kgMS throughout the ’19-’20 production season. Fonterra’s ’20-’21 farmgate milk price forecast was revised $0.40/kgMS higher during Mar ’21, reaching a range of $7.30-$7.90/kgMS. Fonterra stated the ’20-’21 farmgate milk price forecast was revised higher largely due to strong whole milk powder and skim milk powder demand from China and Southeast Asia. The ’20-’21 farmgate milk price forecast is on pace to reach a seven year high level at the midpoint of the estimate.

Cow & Heifer Slaughter

New Zealand cow & heifer slaughter rates declined 1.2% on a YOY basis during Mar ’21 when normalizing for slaughter days, finishing lower for the third consecutive month. Mar ’21 dairy cow & heifer slaughter, which has more limited historical data available, also declined on a YOY basis for the second consecutive month, finishing down 11.0%.

’19-’20 annual New Zealand cow & heifer slaughter rates rebounded 2.7% from the previous year, reaching a four year high level. ’20-’21 YTD New Zealand cow & heifer slaughter rates have increased by an additional 3.5% on a YOY basis throughout the first three quarters of the production season and are on pace to reach a record high annual level, despite the recently experienced declines.

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 five 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 2.6% on a YOY basis throughout 2020 and an additional 0.3% YOY throughout 2021, reaching an 11 year low level.