Executive Summary

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

• New Zealand milk production volumes remained near seasonal lows but reached a record high seasonal level for the fourth consecutive month, finishing up 6.6% YOY.
• 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 0.9% on a YOY basis during Jun ’21 when normalizing for slaughter days, finishing lower for the fifth time in the past six months.

Additional Report Details

Milk Production

According to Dairy Companies Association of New Zealand (DCANZ), Jul ’21 New Zealand milk production volumes remained near seasonal low levels but finished 6.6% above previous year levels, reaching a record high seasonal level for the fourth consecutive month. On a milk-solids basis, production increased 7.3% YOY, also reaching a record high seasonal level. New Zealand milk production volumes reach seasonal lows throughout the months of June and July, with combined production volumes experienced throughout the two month period accounting for less than two percent of total annual volumes over the past ten years.

The Jul ’21 YOY increase in New Zealand milk production volumes was the 14^th experienced throughout the past 15 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 0.9% on a YOY basis during Jun ’21 when normalizing for slaughter days, finishing lower for the fifth time in the past six months. Jun ’21 dairy cow & heifer slaughter, which has more limited historical data available, declined on a YOY basis for the first time in the past three months, finishing 2.6% below previous year levels.

’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.