New Zealand Milk Production Update – Jan ’15
According to Dairy Companies Association of New Zealand (DCANZ), Nov ’14 New Zealand milk production continued the recent trend of production growth, increasing 2.8% YOY. Monthly production of 3.05 million MT (6.7 billion lbs) set a new record high for November, although production declined 4.6% MOM on a daily average basis off of the seasonal high experienced in Oct ’14. New Zealand typically reaches peak milk production in the month of October, with October accounting for nearly 15% of total annual production over the past five years. New Zealand has experienced 16 consecutive months of YOY production gains, although the Nov ’14 production growth rate of 2.8% was the lowest of the period. Nov ’14 production remained 8.1% higher than the three year average November production and 13.4% higher than the five year average November production. Overall, ’14-’15 YTD New Zealand milk production is up 4.3% YOY through the first half of the production season. Lower farmgate milk prices and the dry conditions are expected to temper future production gains. Fonterra revised its forecasted Farmgate Milk Price for the ’14-’15 season in December from $5.30/kgMS to $4.70/kgMS, noting that falling oil prices, geopolitical uncertainty in Russia and Ukraine, and subdued demand from China has contributed to ongoing volatility and weak demand in global dairy markets. In addition, dry conditions over both islands have raised drought concerns. According to USDA AMS, conditions are more severe on the South Island where some irrigation systems are being shut down, due to low river levels. New Zealand cooperatives have revised their seasonal forecasts with seasonal production now estimated to be ranging from flat to 1.5% above last year’s production.