New Zealand Milk Production Update – Dec ’20
Executive Summary
New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Nov ’20. Highlights from the updated report include:
The Nov ’20 YOY decline in New Zealand milk production volumes was the first experienced throughout the past seven months. ’19-’20 annual milk production volumes declined 0.7% on a YOY basis however production on a milk-solids basis increased 0.3% YOY throughout the period. Drought conditions impacted the milk supply throughout the ’19-’20 production season. ‘20-’21 YTD New Zealand milk production volumes have rebounded by 0.8% on a YOY basis throughout the first half of the production season, despite the most recent decline.
Rainfall & Soil Moisture Deficits
New Zealand rainfall reached a 21 year high seasonal level throughout Nov ’20 when weighted regionally by milk production volumes. Rainfall levels finished 76.4% above the previous year and 77.5% above 20 year average seasonal levels for the month of November. Rainfall levels were particularly strong throughout the North Island of New Zealand during Nov ’20.
High rainfall levels experienced throughout the month of November contributed to New Zealand soil moisture deficits finishing lower on a YOY basis for the first time in the past eight months. Nov ’20 New Zealand soil moisture deficits finished 5.2% below previous year levels and 15.0% below 20 year average seasonal levels for the month of November.
Farmgate Milk Prices
Fonterra finalized their ’19-’20 farmgate milk price at a value of $7.14/kgMS in Sep ’20, reaching a six year high level. Fonterra’s ’20-’21 farmgate milk price forecast was revised $0.40/kgMS higher at the bottom end of the forecast while remaining unchanged at the top end of the forecast during Dec ’20, reaching a range of $6.70-$7.30/kgMS. Fonterra stated the ’20-’21 farmgate milk price forecast was revised higher largely due to continued strong Chinese demand as the country continues to recover well from COVID-19.
Cow & Heifer Slaughter
New Zealand cow & heifer slaughter rates increased 13.0% on a YOY basis during Nov ’20 when normalizing for slaughter days, reaching a record high seasonal level. The Nov ’20 YOY increase in cow & heifer slaughter figures was the fifth experienced throughout the past six months and the largest experienced throughout the past ten months on a percentage basis. Nov ’20 dairy cow & heifer slaughter, which has more limited historical data available, increased on a YOY basis for the first time in the past three months, finishing up 6.5%.
’19-’20 annual New Zealand cow & heifer slaughter rates rebounded 2.7% from the previous year, reaching a four year high level. ’20-’21 YTD New Zealand cow & heifer slaughter rates have increased by an additional 7.8% on a YOY basis throughout the first half of the production season and are on pace to reach a record high annual level.
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 have trended flat-to-lower over the five most recent production seasons 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 2.6% on a YOY basis throughout 2020 and an additional 0.3% YOY throughout 2021, reaching an 11 year low level.
- New Zealand milk production volumes declined 2.5% on a YOY basis during Nov ’20, finishing lower on a YOY basis for the first time in the past seven months and reaching a four year low seasonal level.
- Fonterra’s ’20-’21 farmgate milk price forecast of $6.70-$7.30/kgMS was revised $0.40/kgMS higher at the bottom end of the forecast range throughout Dec ’20 on continued strong Chinese demand. The ’20-’21 farmgate milk price forecast remains slightly below the six year high level experienced throughout the previous production season at the midpoint of the estimate, however.
- New Zealand cow & heifer slaughter rates increased 13.0% on a YOY basis during Nov ’20 when normalizing for slaughter days, finishing higher for the fifth time in the past six months and reaching a record high seasonal level.
The Nov ’20 YOY decline in New Zealand milk production volumes was the first experienced throughout the past seven months. ’19-’20 annual milk production volumes declined 0.7% on a YOY basis however production on a milk-solids basis increased 0.3% YOY throughout the period. Drought conditions impacted the milk supply throughout the ’19-’20 production season. ‘20-’21 YTD New Zealand milk production volumes have rebounded by 0.8% on a YOY basis throughout the first half of the production season, despite the most recent decline.
Rainfall & Soil Moisture Deficits
New Zealand rainfall reached a 21 year high seasonal level throughout Nov ’20 when weighted regionally by milk production volumes. Rainfall levels finished 76.4% above the previous year and 77.5% above 20 year average seasonal levels for the month of November. Rainfall levels were particularly strong throughout the North Island of New Zealand during Nov ’20.
High rainfall levels experienced throughout the month of November contributed to New Zealand soil moisture deficits finishing lower on a YOY basis for the first time in the past eight months. Nov ’20 New Zealand soil moisture deficits finished 5.2% below previous year levels and 15.0% below 20 year average seasonal levels for the month of November.
Farmgate Milk Prices
Fonterra finalized their ’19-’20 farmgate milk price at a value of $7.14/kgMS in Sep ’20, reaching a six year high level. Fonterra’s ’20-’21 farmgate milk price forecast was revised $0.40/kgMS higher at the bottom end of the forecast while remaining unchanged at the top end of the forecast during Dec ’20, reaching a range of $6.70-$7.30/kgMS. Fonterra stated the ’20-’21 farmgate milk price forecast was revised higher largely due to continued strong Chinese demand as the country continues to recover well from COVID-19.
Cow & Heifer Slaughter
New Zealand cow & heifer slaughter rates increased 13.0% on a YOY basis during Nov ’20 when normalizing for slaughter days, reaching a record high seasonal level. The Nov ’20 YOY increase in cow & heifer slaughter figures was the fifth experienced throughout the past six months and the largest experienced throughout the past ten months on a percentage basis. Nov ’20 dairy cow & heifer slaughter, which has more limited historical data available, increased on a YOY basis for the first time in the past three months, finishing up 6.5%.
’19-’20 annual New Zealand cow & heifer slaughter rates rebounded 2.7% from the previous year, reaching a four year high level. ’20-’21 YTD New Zealand cow & heifer slaughter rates have increased by an additional 7.8% on a YOY basis throughout the first half of the production season and are on pace to reach a record high annual level.
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 have trended flat-to-lower over the five most recent production seasons 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 2.6% on a YOY basis throughout 2020 and an additional 0.3% YOY throughout 2021, reaching an 11 year low level.