New Zealand Milk Production Update – Aug ’18
Executive Summary
New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Jul ’18. Highlights from the updated report include:
’17-’18 annual New Zealand milk production volumes finished 0.1% above the three year lows experienced during the previous production season as improved pasture conditions were experienced throughout the final months of the New Zealand production season. New Zealand milk production volumes had finished lower on a YOY basis over six of the past eight months prior to the four most recent YOY gains in production volumes.
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 raised $6.55/kgMS to $6.75/kgMS during May ’18 as global supply and demand continued to be positive for farmers. More recently, Fonterra’s ’17-’18 farmgate milk price forecast was reduced slightly to $6.70/kgMS during Aug ’18, remaining at a four year high level. Fonterra’s announced ’18-’19 opening farmgate milk price forecast of $7.00/kgMS is on pace to reach a five 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 rebounded by 4.1% throughout the ’17-’18 production season. Jun ’18 New Zealand cow & heifer slaughter rates finished up 18.1% YOY when normalizing for slaughter days, reaching a record seasonal high for the month of June. New Zealand slaughter is expected to remain at elevated levels throughout coming months as Mycoplasma bovis is eradicated from approximately 150,000 cows.
According to USDA, the 2018 New Zealand dairy cow herd is expected to rebound 0.5% from the six year low levels experienced throughout 2017, however the most recent USDA herd projection does not account for a significant reduction in cow numbers stemming from the eradication of Mycoplasma bovis.
- Jul ’18 New Zealand milk production volumes remained near seasonal low levels but finished higher on a YOY basis for the fourth consecutive month, increasing 5.6% to a new record seasonal high for the month of July. June and July production volumes typically combine to account for less than two percent of annual volumes.
- Fonterra’s ’17-’18 farmgate milk price forecast was reduced slightly to $6.70/kgMS during Aug ’18 but remained at a four year high level. Fonterra’s announced ’18-’19 opening farmgate milk price forecast of $7.00/kgMS is on pace to reach a five year high.
- Jun ’18 New Zealand cow & heifer slaughter rates finished up 18.1% YOY when normalizing for slaughter days, reaching a record seasonal high for the month of June. New Zealand slaughter is expected to remain at elevated levels throughout coming months as Mycoplasma bovis is eradicated from approximately 150,000 cows.
’17-’18 annual New Zealand milk production volumes finished 0.1% above the three year lows experienced during the previous production season as improved pasture conditions were experienced throughout the final months of the New Zealand production season. New Zealand milk production volumes had finished lower on a YOY basis over six of the past eight months prior to the four most recent YOY gains in production volumes.
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 raised $6.55/kgMS to $6.75/kgMS during May ’18 as global supply and demand continued to be positive for farmers. More recently, Fonterra’s ’17-’18 farmgate milk price forecast was reduced slightly to $6.70/kgMS during Aug ’18, remaining at a four year high level. Fonterra’s announced ’18-’19 opening farmgate milk price forecast of $7.00/kgMS is on pace to reach a five 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 rebounded by 4.1% throughout the ’17-’18 production season. Jun ’18 New Zealand cow & heifer slaughter rates finished up 18.1% YOY when normalizing for slaughter days, reaching a record seasonal high for the month of June. New Zealand slaughter is expected to remain at elevated levels throughout coming months as Mycoplasma bovis is eradicated from approximately 150,000 cows.
According to USDA, the 2018 New Zealand dairy cow herd is expected to rebound 0.5% from the six year low levels experienced throughout 2017, however the most recent USDA herd projection does not account for a significant reduction in cow numbers stemming from the eradication of Mycoplasma bovis.