New Zealand Milk Production Update – Nov ’16
New Zealand Milk Production Update – Nov ’16
Executive Summary
New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Oct ’16. Highlights from the updated report include:
The YOY decline in production volumes experienced during Oct ’16 was the largest experienced throughout the past 13 months on a percentage basis. Wet weather conditions experienced in particular throughout the North Island of New Zealand contributed to the significant decline in production experienced during Oct ’16.
Oct ’16 New Zealand rainfall increased to a three year high for the month of October when weighted based on levels of regional milk production, finishing 63.9% above the previous year precipitation levels. Rainfall increased most significantly on the North Island, where total precipitation levels reached a five year seasonal high during Oct ’16.
In addition to wet weather conditions, an earthquake, which hit the northeast region of New Zealand’s South Island during early Nov ’16, is also expected to contribute to YOY declines in production throughout future months. Ramifications of the earthquake remain unknown, however, according to Fonterra, road closures have resulted in cooperative members being forced to dump milk. The North Canterbury region of New Zealand, which was impacted most significantly from the earthquake, is home to approximately 13% of New Zealand’s dairy cow herd.
New Zealand 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. The ’16-’17 farmgate milk price forecast has been revised higher a total of three times over the past four months, however, as a gradual rebalancing of global supply and demand continues to take place. The current ’16-’17 farmgate milk price forecast of $6.00/kgMS is 54% above ’15-’16 price levels and 8% above three year average prices.
New Zealand slaughter rates accelerated throughout the final months of the ’15-’16 production season, reaching record seasonal highs. Overall, ’15-’16 annual New Zealand cow & heifer slaughter rates finished up 3.2% YOY, reaching a record annual high. New Zealand cow & heifer slaughter rates have declined by 8.9% in total over the first third of the ’16-’17 production season, however, as a 29.1% YOY decline in slaughter rates was experienced during Sep ’16. Despite the significant YOY decline in slaughter rates, Sep ’16 cow & heifer slaughter remained 3.3% above three year average figures and 25.3% above ten year average figures.
- New Zealand milk production volumes continued to increase seasonally but finished lower on a YOY basis during Oct ’16, declining by 5.5%. The YOY decline in production volumes was the largest experienced throughout the past 13 months.
- ’16-’17 New Zealand farmgate milk price projections were revised higher for the third time in the past four months during Nov ’16, increasing to a value of $6.00/kgMS. The current ’16-’17 farmgate milk price forecast is 53.8% above ’15-’16 price levels and 7.8% above three year average price levels.
- New Zealand cow & heifer slaughter rates reached a record annual high during the ’15-’16 production season but have declined by 8.9% on a YOY basis throughout the first third of the ’16-’17 production season. New Zealand cow & heifer slaughter rates declined by 29.1% YOY during Sep ’16 but remain above three year average figures.
The YOY decline in production volumes experienced during Oct ’16 was the largest experienced throughout the past 13 months on a percentage basis. Wet weather conditions experienced in particular throughout the North Island of New Zealand contributed to the significant decline in production experienced during Oct ’16.
Oct ’16 New Zealand rainfall increased to a three year high for the month of October when weighted based on levels of regional milk production, finishing 63.9% above the previous year precipitation levels. Rainfall increased most significantly on the North Island, where total precipitation levels reached a five year seasonal high during Oct ’16.
In addition to wet weather conditions, an earthquake, which hit the northeast region of New Zealand’s South Island during early Nov ’16, is also expected to contribute to YOY declines in production throughout future months. Ramifications of the earthquake remain unknown, however, according to Fonterra, road closures have resulted in cooperative members being forced to dump milk. The North Canterbury region of New Zealand, which was impacted most significantly from the earthquake, is home to approximately 13% of New Zealand’s dairy cow herd.
New Zealand 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. The ’16-’17 farmgate milk price forecast has been revised higher a total of three times over the past four months, however, as a gradual rebalancing of global supply and demand continues to take place. The current ’16-’17 farmgate milk price forecast of $6.00/kgMS is 54% above ’15-’16 price levels and 8% above three year average prices.
New Zealand slaughter rates accelerated throughout the final months of the ’15-’16 production season, reaching record seasonal highs. Overall, ’15-’16 annual New Zealand cow & heifer slaughter rates finished up 3.2% YOY, reaching a record annual high. New Zealand cow & heifer slaughter rates have declined by 8.9% in total over the first third of the ’16-’17 production season, however, as a 29.1% YOY decline in slaughter rates was experienced during Sep ’16. Despite the significant YOY decline in slaughter rates, Sep ’16 cow & heifer slaughter remained 3.3% above three year average figures and 25.3% above ten year average figures.