Fonterra production forecast down – and could fall even further

Published 10 September 15

New Zealand co-op Fonterra forecast the country's milk production to fall 2-3% in the current milk year (Jun-May) compared to last year, although it suggests the forecast could fall even more.

The co-op have stated that farmers are presently responding to low prices by culling more cows, reducing feed supplement usage and lowering stocking rates per hectare.

As pressure remains on prices and with the threat of an El Nino weather event looming, Fonterra says production could fall even further than currently forecast.

As seen in February 2015, the Global Dairy Trade auction reacts to NZ production developments. Production eased in February, due to drought, which caused increased buyer activity and a spike in prices on the auction. However, rain allowed for production forecasts to rise and GDT prices fell again in March. If NZ production begins to reduce over the coming months, it could result in buyers returning to the market in expectation of reduced global supply.