New Zealand Milk Production Update – Nov ’14
According to Dairy Companies Association of New Zealand (DCANZ), Sep ’14 New Zealand milk production continued the recent trend of production growth, increasing 5.2% YOY. The YOY monthly gain was the 14th in a row, but the second lowest in nine months. Sep ’14 production remained 12.0% higher than the three year average September production and 19.3% higher than the five year average September production. The Sep ’14 figure was the most meaningful production data point in over half a year as New Zealand milk production reaches its seasonal low throughout our summer months. New Zealand milk production gains are expected to moderate in future months, particularly on a YOY basis. Recent monthly YOY gains were historically strong partially due to adverse weather conditions reducing production throughout the spring and summer of 2013. YOY milk production gains began to pick up in August of last year which will reduce future ’14-’15 monthly YOY gains, all other factors being equal. In addition, Fonterra revised its forecast Farmgate Milk Price for the ’14-’15 season in September from $6.00/kgMS to $5.30/kgMS, noting increased volatility in international dairy commodity prices and further downside price risk. Lower Farmgate Milk Prices are expected to temper future production gains. New Zealand milk production is highly seasonal with nearly 75% of total milk produced in the six month period ranging from Sep – Feb. New Zealand milk production typically peaks in October before declining seasonally until our summer months. According to the Fonterra November Global Dairy Update, milk collections across New Zealand were up 4.0% YOY in Oct ’14. North Island collections were up 4.7% YOY in Oct ’14 as mild spring temperatures, good soil moisture and strong pasture growth supported production growth. Oct ’14 South Island collections were up 2.9% YOY as conditions were more variable, with cooler conditions experienced in central and the lower South Island. Official DCANZ data on Oct ’14 milk production will become available in mid to late December.