New Zealand Milk Production Update – Mar ’18
Executive Summary
New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Feb ’18. Highlights from the updated report include:
The Feb ’18 YOY decline in milk production volumes was the smallest experienced throughout the past three months as weather conditions generally improved across New Zealand. New Zealand milk production volumes have finished lower on a YOY basis over five of the past seven 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. When regionally weighted by milk production volumes, Feb ’18 total New Zealand rainfall rebounded once again, finishing 90.9% above previous year levels and reaching a 14 year seasonal high for the month of February. Total February rainfall levels finished 119.4% above 20 year average seasonal levels.
Higher rainfall levels experienced throughout the month of February contributed to declining soil moisture deficits across New Zealand. When weighted by milk production, New Zealand soil moisture deficits finished 32.6% below previous year levels and 37.0% below 20 year average seasonal figures, finishing at a 14 year seasonal low for the month of February.
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 3.8% throughout the first two thirds of the ’17-’18 production season. Jan ’18 slaughter increased 14.9% YOY when normalized for slaughter days, finishing higher on a YOY basis for the fourth consecutive month. 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.
- Feb ’18 New Zealand milk production volumes declined on a YOY basis for the third consecutive month, finishing down 2.3% to a three year seasonal low. The decline in production volumes occurred despite rainfall levels rebounding to a 14 year seasonal high during Feb ’18, contributing to soil moisture deficits finishing at a 14 year seasonal low.
- 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.
- Jan ’18 New Zealand cow & heifer slaughter rates increased 14.9% YOY when normalized for slaughter days, finishing higher on a YOY basis for the fourth consecutive month.
The Feb ’18 YOY decline in milk production volumes was the smallest experienced throughout the past three months as weather conditions generally improved across New Zealand. New Zealand milk production volumes have finished lower on a YOY basis over five of the past seven 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. When regionally weighted by milk production volumes, Feb ’18 total New Zealand rainfall rebounded once again, finishing 90.9% above previous year levels and reaching a 14 year seasonal high for the month of February. Total February rainfall levels finished 119.4% above 20 year average seasonal levels.
Higher rainfall levels experienced throughout the month of February contributed to declining soil moisture deficits across New Zealand. When weighted by milk production, New Zealand soil moisture deficits finished 32.6% below previous year levels and 37.0% below 20 year average seasonal figures, finishing at a 14 year seasonal low for the month of February.
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 3.8% throughout the first two thirds of the ’17-’18 production season. Jan ’18 slaughter increased 14.9% YOY when normalized for slaughter days, finishing higher on a YOY basis for the fourth consecutive month. 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.