Archive: New Zealand milk production may be affected by dry conditions

Published 17 December 14

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The ongoing dry weather conditions in New Zealand have led to water usage restrictions being imposed on some dairy farmers in the south island. These restrictions could become more severe and may extend to the more concentrated dairying regions in the north island if the current dry weather continues. At the end of November, New Zealand’s national weather institute (NIWA) increased the likelihood of dry spells caused by an El Nino type weather event occurring over the next three months to 75%, up from 66% the previous month. .

New Zealand milk production is currently running 9% higher than last year on a rolling average basis (see here for further information on New Zealand milk production). However, analysts predict that an extended period of dry weather could limit the growth in milk production to 2% in the 2014/15 season.

The current downward pressure on global commodity prices, which is impacting on GB farmgate prices, is being driven by global supply of dairy products exceeding demand. With New Zealand being one of the world’s largest exporters of dairy products, accounting for around 60% and 20% of global exports of butter and SMP respectively, any restriction in supply could help to stabilise global prices.