Executive Summary

New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Jun ’18. Highlights from the updated report include:

• Jun ’18 New Zealand milk production volumes declined to a seasonal low level but finished higher on a YOY basis for the third consecutive month, increasing 11.2% to a new record seasonal high for the month of June. June production volumes typically account for less than one percent of annual volumes.
• Fonterra’s ’17-’18 farmgate milk price forecast was raised from $6.55/kgMS to $6.75/kgMS during May ’18 as global supply and demand continues to be positive for farmers. Fonterra also announced a ’18-’19 opening farmgate milk price forecast of $7.00/kgMS, which would be a five year high.
• May ’18 New Zealand cow & heifer slaughter rates declined 2.4% YOY from the record high levels experienced last year when normalized for slaughter days but remained at the second highest monthly figure on record. New Zealand slaughter is expected to remain at elevated levels throughout coming months as Mycoplasma bovis is eradicated from approximately 150,000 cows.

Additional Report Details

According to DCANZ, Jun ’18 New Zealand milk production volumes declined to a seasonal low level but remained higher on a YOY basis for the third consecutive month, finishing up 11.2% to a new record seasonal high for the month of June. On a milk-solids basis, production increased 12.1% YOY, also finishing higher for the third consecutive month. New Zealand milk production volumes reach seasonal lows throughout the month of June, with June production volumes accounting for less than one percent of total annual volumes throughout the past five years.

’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 three 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 continues to be positive for farmers. Current Fonterra farmgate milk price forecasts are 10.3% above ’16-’17 price levels and are on pace to reach a four year high. Fonterra also announced a ’18-’19 opening farmgate milk price forecast of $7.00/kgMS, which would be 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 2.4% below the monthly record high when normalizing for slaughter days but remained at the second highest monthly figure on record. New Zealand slaughter is expected to remain at elevated levels throughout coming months as Mycoplasma bovis is eradicated from approximately 150,000 cows.