New Zealand Milk Production Update – Apr’18
Executive Summary
New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Mar ’18. Highlights from the updated report include:
The Mar ’18 YOY decline in milk production volumes was the smallest experienced throughout the past four months, however, as weather conditions generally improved across New Zealand. New Zealand milk production volumes have finished lower on a YOY basis over six of the past eight 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 prior to increasing yet again in the early months of 2018. When regionally weighted by milk production volumes, Mar ’18 total New Zealand rainfall finished 34.8% below previous year levels but remained 17.9% above 20 year average seasonal levels.
Above average rainfall levels experienced throughout recent months have contributed to declining soil moisture deficits across New Zealand. When weighted by milk production, New Zealand soil moisture deficits finished 29.7% below previous year levels and 46.6% below 20 year average seasonal figures, finishing at a record low for the month of March.
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 Fonterra raised the ’17-’18 price forecast up to $6.55/kgMS in Mar ’18, noting strong global dairy demand. Current Fonterra farmgate milk price forecasts are 7.0% 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 but have rebounded by 1.4% throughout the first three quarters of the ’17-’18 production season, despite finishing lower during Feb ’18. Feb ’18 New Zealand cow & heifer slaughter rates declined 11.6% YOY when normalized for slaughter days, finishing lower on a YOY basis for the first time in the past five months. 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.
- Mar ’18 New Zealand milk production volumes declined on a YOY basis for the fourth consecutive month, finishing down 1.5%. The decline in production volumes occurred despite soil moisture deficits finishing at a record low seasonal value throughout the month of March.
- Fonterra’s ’17-’18 farmgate milk price forecast was raised from $6.40/kgMS to $6.55/kgMS during Mar ’18 on strong global dairy demand. Current farmgate milk prices are 7.0% above ’16-’17 price levels and are on pace to reach a four year high.
- Feb ’18 New Zealand cow & heifer slaughter rates declined 11.6% YOY when normalized for slaughter days, finishing lower on a YOY basis for the first time in the past five months.
The Mar ’18 YOY decline in milk production volumes was the smallest experienced throughout the past four months, however, as weather conditions generally improved across New Zealand. New Zealand milk production volumes have finished lower on a YOY basis over six of the past eight 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 prior to increasing yet again in the early months of 2018. When regionally weighted by milk production volumes, Mar ’18 total New Zealand rainfall finished 34.8% below previous year levels but remained 17.9% above 20 year average seasonal levels.
Above average rainfall levels experienced throughout recent months have contributed to declining soil moisture deficits across New Zealand. When weighted by milk production, New Zealand soil moisture deficits finished 29.7% below previous year levels and 46.6% below 20 year average seasonal figures, finishing at a record low for the month of March.
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 Fonterra raised the ’17-’18 price forecast up to $6.55/kgMS in Mar ’18, noting strong global dairy demand. Current Fonterra farmgate milk price forecasts are 7.0% 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 but have rebounded by 1.4% throughout the first three quarters of the ’17-’18 production season, despite finishing lower during Feb ’18. Feb ’18 New Zealand cow & heifer slaughter rates declined 11.6% YOY when normalized for slaughter days, finishing lower on a YOY basis for the first time in the past five months. 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.