New Zealand Milk Production Update – May ’20
Executive Summary
New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Apr ’20. Highlights from the updated report include:
New Zealand milk production volumes have finished lower on a YOY basis over seven of the past eight months through Apr ’20. ’19-’20 YTD milk production volumes have declined by 0.9% on a YOY basis heading into the final month of the production season however production on a milk-solids basis has increased 0.2% on a YOY basis throughout the period.
Farmgate Milk Prices
Fonterra’s current ’19-’20 farmgate milk price forecast was reduced to a midpoint of $7.20/kgMS during May ’20, down from a midpoint of $7.30/kgMS, citing a softening of demand relative to supply. The ’19-’20 farmgate milk price forecast remains on pace to reach a six year high level. Fonterra announced an opening ’20-’21 farmgate milk price forecast of $5.40-$6.90/kgMS, with the wide range reflecting the heightened uncertainty surrounding the COVID-19 outlook. The opening price range was 50% larger than the previous year opening price forecast.
Cow & Heifer Slaughter
New Zealand cow & heifer slaughter rates declined 4.9% on a YOY basis during Apr ’20 when normalizing for slaughter days, finishing lower on a YOY basis for the second consecutive month. New Zealand cow & heifer slaughter rates had finished higher on a YOY basis over eight consecutive months prior to the recent declines. Apr ’20 dairy cow & heifer slaughter, which has more limited historical data available, also declined on a YOY basis for the second consecutive month, finishing down 8.9%.
’18-’19 annual New Zealand cow & heifer slaughter rates declined 0.7% YOY while finishing 2.3% below three year average figures, however ’19-’20 YTD slaughter figures have rebounded by 4.0% heading into the final month of the production season and are on pace to reach a four year high level.
New Zealand milk production volumes increased at a compound annual growth rate of 4.2% over the ten year period ending during the ’14-’15 record production season but have trended flat-to-lower over the four most recent production seasons as farmgate milk prices declined from the ’13-’14 record high levels and the New Zealand milk cow herd was reduced. USDA is projecting the New Zealand milk cow herd will decline slightly on a YOY basis throughout 2020 but remain above the six year low level experienced throughout 2017.
- New Zealand milk production volumes declined on a YOY basis for the seventh time in the past eight months during Apr ’20, finishing down 0.6%. Production on a milk-solids basis declined on a YOY basis for the second time in the past three months, finishing down 0.8%.
- Fonterra announced an opening ’20-’21 farmgate milk price forecast of $5.40-$6.90/kgMS, with the wide range reflecting the heightened uncertainty surrounding the COVID-19 outlook. The opening price range was 50% larger than the previous year opening price forecast.
- New Zealand cow & heifer slaughter rates declined 4.9% on a YOY basis during Apr ’20 when normalizing for slaughter days, finishing lower on a YOY basis for the second consecutive month.
New Zealand milk production volumes have finished lower on a YOY basis over seven of the past eight months through Apr ’20. ’19-’20 YTD milk production volumes have declined by 0.9% on a YOY basis heading into the final month of the production season however production on a milk-solids basis has increased 0.2% on a YOY basis throughout the period.
Farmgate Milk Prices
Fonterra’s current ’19-’20 farmgate milk price forecast was reduced to a midpoint of $7.20/kgMS during May ’20, down from a midpoint of $7.30/kgMS, citing a softening of demand relative to supply. The ’19-’20 farmgate milk price forecast remains on pace to reach a six year high level. Fonterra announced an opening ’20-’21 farmgate milk price forecast of $5.40-$6.90/kgMS, with the wide range reflecting the heightened uncertainty surrounding the COVID-19 outlook. The opening price range was 50% larger than the previous year opening price forecast.
Cow & Heifer Slaughter
New Zealand cow & heifer slaughter rates declined 4.9% on a YOY basis during Apr ’20 when normalizing for slaughter days, finishing lower on a YOY basis for the second consecutive month. New Zealand cow & heifer slaughter rates had finished higher on a YOY basis over eight consecutive months prior to the recent declines. Apr ’20 dairy cow & heifer slaughter, which has more limited historical data available, also declined on a YOY basis for the second consecutive month, finishing down 8.9%.
’18-’19 annual New Zealand cow & heifer slaughter rates declined 0.7% YOY while finishing 2.3% below three year average figures, however ’19-’20 YTD slaughter figures have rebounded by 4.0% heading into the final month of the production season and are on pace to reach a four year high level.
New Zealand milk production volumes increased at a compound annual growth rate of 4.2% over the ten year period ending during the ’14-’15 record production season but have trended flat-to-lower over the four most recent production seasons as farmgate milk prices declined from the ’13-’14 record high levels and the New Zealand milk cow herd was reduced. USDA is projecting the New Zealand milk cow herd will decline slightly on a YOY basis throughout 2020 but remain above the six year low level experienced throughout 2017.