Archive: Reduced milk production in New Zealand may help support global prices

Published 25 February 15

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New Zealand has experienced a recent, rapid slowdown in milk production according to industry commentators. This could help to offset the seasonal increases in European milk production which are threatening to limit recent improvements in global prices.

The reduced farmgate price and ongoing dry weather across New Zealand is expected to mean total milk volumes in the 2014/15 season will be 3.3% down on last year, according to Fonterra forecasts. This translates to about 15% reduction in milk produced in the remainder of the current season (Jan-May) as production in the first seven months is around 4% up on the previous year.  

With farm incomes likely to be lower this year, New Zealand dairy farmers may be incentivised to reduce herds by the current high prices for cull cows. Culling rates in both the North and South islands are reported to be significantly above the same time last year. If this leads to a significantly smaller national herd, it may delay any response to more favourable weather conditions and/or improved farmgate milk prices.