New Zealand Milk Production Update – Jan ’21
Executive Summary
New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Dec ’20. Highlights from the updated report include:
The Dec ’20 YOY increase in New Zealand milk production volumes was the seventh experienced throughout the past eight months. ’19-’20 annual milk production volumes declined 0.7% on a YOY basis however production on a milk-solids basis increased 0.3% YOY throughout the period. Drought conditions impacted the milk supply throughout the ’19-’20 production season. ‘20-’21 YTD New Zealand milk production volumes have rebounded by 0.8% on a YOY basis throughout the first seven months of the production season.
Rainfall & Soil Moisture Deficits
Dec ’20 New Zealand rainfall volumes declined from the 21 year high seasonal level experienced throughout the previous month when weighted regionally by milk production volumes, finishing 36.4% below previous year levels. Rainfall levels finished 23.7% below 20 year average seasonal levels for the month of December, reaching a three year low seasonal level.
Soil moisture deficits remained slightly lower on a YOY basis throughout Dec ’20, despite the reduced rainfall levels experienced throughout the month of December. Dec ’20 New Zealand soil moisture deficits finished 3.2% below previous year levels and 7.0% below 20 year average seasonal levels for the month of December. According to the USDA, expected rain in coming weeks is expected to continue to improve pasture growth on both the North and South Islands.
Farmgate Milk Prices
Fonterra finalized their ’19-’20 farmgate milk price at a value of $7.14/kgMS in Sep ’20, reaching a six year high level. Fonterra’s ’20-’21 farmgate milk price forecast was revised $0.40/kgMS higher at the bottom end of the forecast while remaining unchanged at the top end of the forecast during Dec ’20, reaching a range of $6.70-$7.30/kgMS. Fonterra stated the ’20-’21 farmgate milk price forecast was revised higher largely due to continued strong Chinese demand as the country continues to recover well from COVID-19.
Cow & Heifer Slaughter
New Zealand cow & heifer slaughter rates increased 9.2% on a YOY basis during Dec ’20 when normalizing for slaughter days, reaching a three year high seasonal level. The Dec ’20 YOY increase in cow & heifer slaughter figures was the sixth experienced throughout the past seven months. Dec ’20 dairy cow & heifer slaughter, which has more limited historical data available, increased on a YOY basis for the second consecutive month, finishing up 7.1%.
’19-’20 annual New Zealand cow & heifer slaughter rates rebounded 2.7% from the previous year, reaching a four year high level. ’20-’21 YTD New Zealand cow & heifer slaughter rates have increased by an additional 7.9% on a YOY basis throughout the first seven months of the production season and are on pace to reach a record high annual 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 five 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 2.6% on a YOY basis throughout 2020 and an additional 0.3% YOY throughout 2021, reaching an 11 year low level.
- New Zealand milk production volumes increased 0.7% on a YOY basis during Dec ’20, reaching a five year high seasonal level. The YOY increase in New Zealand milk production volumes was the seventh experienced throughout the past eight months.
- Fonterra’s ’20-’21 farmgate milk price forecast of $6.70-$7.30/kgMS was revised $0.40/kgMS higher at the bottom end of the forecast range throughout Dec ’20 on continued strong Chinese demand. The ’20-’21 farmgate milk price forecast remains slightly below the six year high level experienced throughout the previous production season at the midpoint of the estimate, however.
- New Zealand cow & heifer slaughter rates increased 9.2% on a YOY basis during Dec ’20 when normalizing for slaughter days, finishing higher for the sixth time in the past seven months and reaching a three year high seasonal level.
The Dec ’20 YOY increase in New Zealand milk production volumes was the seventh experienced throughout the past eight months. ’19-’20 annual milk production volumes declined 0.7% on a YOY basis however production on a milk-solids basis increased 0.3% YOY throughout the period. Drought conditions impacted the milk supply throughout the ’19-’20 production season. ‘20-’21 YTD New Zealand milk production volumes have rebounded by 0.8% on a YOY basis throughout the first seven months of the production season.
Rainfall & Soil Moisture Deficits
Dec ’20 New Zealand rainfall volumes declined from the 21 year high seasonal level experienced throughout the previous month when weighted regionally by milk production volumes, finishing 36.4% below previous year levels. Rainfall levels finished 23.7% below 20 year average seasonal levels for the month of December, reaching a three year low seasonal level.
Soil moisture deficits remained slightly lower on a YOY basis throughout Dec ’20, despite the reduced rainfall levels experienced throughout the month of December. Dec ’20 New Zealand soil moisture deficits finished 3.2% below previous year levels and 7.0% below 20 year average seasonal levels for the month of December. According to the USDA, expected rain in coming weeks is expected to continue to improve pasture growth on both the North and South Islands.
Farmgate Milk Prices
Fonterra finalized their ’19-’20 farmgate milk price at a value of $7.14/kgMS in Sep ’20, reaching a six year high level. Fonterra’s ’20-’21 farmgate milk price forecast was revised $0.40/kgMS higher at the bottom end of the forecast while remaining unchanged at the top end of the forecast during Dec ’20, reaching a range of $6.70-$7.30/kgMS. Fonterra stated the ’20-’21 farmgate milk price forecast was revised higher largely due to continued strong Chinese demand as the country continues to recover well from COVID-19.
Cow & Heifer Slaughter
New Zealand cow & heifer slaughter rates increased 9.2% on a YOY basis during Dec ’20 when normalizing for slaughter days, reaching a three year high seasonal level. The Dec ’20 YOY increase in cow & heifer slaughter figures was the sixth experienced throughout the past seven months. Dec ’20 dairy cow & heifer slaughter, which has more limited historical data available, increased on a YOY basis for the second consecutive month, finishing up 7.1%.
’19-’20 annual New Zealand cow & heifer slaughter rates rebounded 2.7% from the previous year, reaching a four year high level. ’20-’21 YTD New Zealand cow & heifer slaughter rates have increased by an additional 7.9% on a YOY basis throughout the first seven months of the production season and are on pace to reach a record high annual 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 five 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 2.6% on a YOY basis throughout 2020 and an additional 0.3% YOY throughout 2021, reaching an 11 year low level.