Executive Summary

New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Jun ’21. Highlights from the updated report include:

• New Zealand milk production volumes declined seasonally to a 12 month low level but remained 1.7% higher on a YOY basis during Jun ’21, reaching a record high seasonal level. The YOY increase in New Zealand milk production volumes was the 13^th experienced throughout the past 14 months.
• Fonterra’s ’20-’21 farmgate milk price forecast of $7.45-$7.65/kgMS is expected to reach a seven year high level on strong Chinese and Southeast Asian powder demand. Fonterra’s initial ’21-’22 farmgate milk price forecast of $7.25-$8.75/kgMS began up an additional 6.0% at the midpoint, although the wide initial range reflects a number of major risks.
• New Zealand cow & heifer slaughter rates declined 0.3% on a YOY basis during May ’21 when normalizing for slaughter days, finishing lower for the fourth time in the past five months.

Additional Report Details

Milk Production

According to Dairy Companies Association of New Zealand (DCANZ), Jun ’21 New Zealand milk production volumes declined seasonally to a 12 month low level but finished 1.7% above previous year levels, reaching a record high seasonal level for the third consecutive month. Production volumes typically reach seasonal low levels throughout the month of June, prior to increasing seasonally until peak levels are reached throughout the month of October. On a milk-solids basis, production increased 1.6% YOY, also reaching a record high seasonal level.

The Jun ’21 YOY increase in New Zealand milk production volumes was the 13^th experienced throughout the past 14 months. ‘20-’21 annual New Zealand milk production volumes increased by 3.0% on a YOY basis, reaching a record high annual level. The 3.0% annual growth rate was the largest experienced throughout the past seven years.

Farmgate Milk Prices

Fonterra’s ’20-’21 farmgate milk price forecast of $7.45-$7.65/kgMS is expected to reach a seven year high level on strong Chinese and Southeast Asian powder demand. Fonterra’s initial ’21-’22 farmgate milk price forecast of $7.25-$8.75/kgMS began up an additional 6.0% at the midpoint, although the wide initial range reflects major risks including the impact of governments winding back their economic stimulus packages, foreign exchange volatility, changes in global supply and demand patterns at current high price levels, and geopolitical issues.

Cow & Heifer Slaughter

New Zealand cow & heifer slaughter rates declined 0.3% on a YOY basis during May ’21 when normalizing for slaughter days, finishing lower for the fourth time in the past five months. May ’21 dairy cow & heifer slaughter, which has more limited historical data available, remained higher on a YOY basis for the second consecutive month, however, finishing up 4.6%.

’20-’21 annual New Zealand cow & heifer slaughter finished 4.0% above the previous year, reaching a five year high level and the third highest annual figure on record.

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 growth has moderated over more recent years 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 1.5% on a YOY basis throughout 2021, reaching a ten year low level.