New Zealand Milk Production Update – Jan ’18
Executive Summary
New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Dec ’17. Highlights from the updated report include:
The Dec ’17 YOY decline in milk production volumes was the largest experienced throughout the past 12 months on an absolute basis. New Zealand milk production volumes have finished lower on a YOY basis over three of the past five months.
New Zealand milk production volumes were temporarily reduced due to wet weather conditions experienced throughout the early months of the production season however rainfall levels declined to below ten year average figures throughout the final quarter of 2017. When regionally weighted by milk production volumes, Dec ’17 total New Zealand rainfall finished 34.7% below previous year levels, declining to a six year seasonal low for the month of December. Total December rainfall levels finished 48.4% below ten year average levels.
Lower rainfall levels experienced throughout recent months have contributed to increasing soil moisture deficits across New Zealand. When weighted by milk production, New Zealand soil moisture deficits finished 35.2% above previous year levels and 28.9% above ten year average figures, finishing at a record seasonal high for the month of December.
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. New Zealand farmgate milk prices rebounded to a three year high during the ’16-’17 production season as a gradual rebalancing of global supply and demand took place. Fonterra’s ’17-’18 farmgate milk price forecast was reduced from $6.75/kgMS to $6.40/kgMS during Dec ’17 on concerns over excess global milk production and high global powder stocks however current farmgate milk price forecasts remain 4.6% above’16-’17 price levels and are on pace to reach a four year high.
’16-’17 annual New Zealand cow & heifer slaughter rates declined 11.7% from the record high levels experienced during the previous production season and remain down an additional 3.0% throughout the first half of the ’17-’18 production season, despite recently experienced YOY increases in slaughter rates. Nov ’17 slaughter increased 9.6% YOY when normalized for slaughter days, finishing higher on a YOY basis for the second consecutive month. USDA projects the New Zealand dairy cow herd will increase slightly throughout the 2018 calendar year, increasing 0.5% from the six year low experienced during 2017.
- Dec ’17 New Zealand milk production volumes declined on a YOY basis for the first time in the past three months, finishing down 2.6% to a five year seasonal low. Rainfall levels declined to a six year seasonal low during Dec ’17, contributing to soil moisture deficits increasing to a record seasonal high level throughout the month.
- Fonterra’s ’17-’18 farmgate milk price forecast was reduced from $6.75/kgMS to $6.40/kgMS during Dec ’17 on concerns over excess global milk production and high global powder stocks. Current farmgate milk prices remain 4.6% above ’16-’17 price levels and are on pace to reach a four year high, however.
- ’16-’17 annual New Zealand cow & heifer slaughter rates declined 11.7% YOY from the record high levels experienced during the previous production season and remain down an additional 3.0% throughout the first half of the ’17-’18 production season, despite recently experienced YOY increases in slaughter rates. Nov ’17 New Zealand cow & heifer slaughter rates increased 9.6% YOY when normalized for slaughter days, finishing higher on a YOY basis for the second consecutive month.
The Dec ’17 YOY decline in milk production volumes was the largest experienced throughout the past 12 months on an absolute basis. New Zealand milk production volumes have finished lower on a YOY basis over three of the past five months.
New Zealand milk production volumes were temporarily reduced due to wet weather conditions experienced throughout the early months of the production season however rainfall levels declined to below ten year average figures throughout the final quarter of 2017. When regionally weighted by milk production volumes, Dec ’17 total New Zealand rainfall finished 34.7% below previous year levels, declining to a six year seasonal low for the month of December. Total December rainfall levels finished 48.4% below ten year average levels.
Lower rainfall levels experienced throughout recent months have contributed to increasing soil moisture deficits across New Zealand. When weighted by milk production, New Zealand soil moisture deficits finished 35.2% above previous year levels and 28.9% above ten year average figures, finishing at a record seasonal high for the month of December.
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. New Zealand farmgate milk prices rebounded to a three year high during the ’16-’17 production season as a gradual rebalancing of global supply and demand took place. Fonterra’s ’17-’18 farmgate milk price forecast was reduced from $6.75/kgMS to $6.40/kgMS during Dec ’17 on concerns over excess global milk production and high global powder stocks however current farmgate milk price forecasts remain 4.6% above’16-’17 price levels and are on pace to reach a four year high.
’16-’17 annual New Zealand cow & heifer slaughter rates declined 11.7% from the record high levels experienced during the previous production season and remain down an additional 3.0% throughout the first half of the ’17-’18 production season, despite recently experienced YOY increases in slaughter rates. Nov ’17 slaughter increased 9.6% YOY when normalized for slaughter days, finishing higher on a YOY basis for the second consecutive month. USDA projects the New Zealand dairy cow herd will increase slightly throughout the 2018 calendar year, increasing 0.5% from the six year low experienced during 2017.