Strong production, tested demand send milk prices crashing
Strong global milk production and rebalancing of demand among key buyers has delivered one of the biggest drops in whole milk powder prices in recent years.
The North Island fared better in the 2020- 21 season with full season collection of 908 million kgMS, 3.9% ahead of last season. The South Island’s full season collection dropped 1.8% to 630 million kgMS.
Full season New Zealand milk production for the 12 months to May was 2.6% higher than last year.
May was a bumper months for milk production in the North Island. Fonterra’s New Zealand collection for May was 75.3 million kgMS, 7.7% higher than May last season. North Island collection reached 38.6 million kgMS, a whopping 28.6% improvement.
May collections continued the strength seen in April, benefiting from warm and sunny weather with useful rainfall in many areas giving favourable growing conditions, the co-operative says.
However, it was a different story for the South Island: May collection was 36.7 million kgMS, behind 8%. Fonterra says collections for South Island began to drop off more quickly during the second half of May than in recent seasons.
“The heavy rain in the last weekend of the month caused flooding in some areas, with disruption to collections as a result.”
Fonterra says overall May started with settled weather across the country before rain arrived for western areas towards the middle of the month. Warmer and drier conditions returned in the second half of the month, with already dry regions of both islands missing out on meaningful rainfall. Temperatures were above May average across the country, and sunshine hours higher than average for most regions.
Oz Collections Steady
Fonterra collected 7.7 million kgMS from its Australian suppliers in May, a 0.2% increase on May last season.
However, season-to-date collection was 1% down on last season, with favourable on-farm conditions throughout the season stabilising milk production.
The co-op says favourable autumn conditions across Victoria and Tasmania has meant stable milk production in May.
Total Australian milk production was flat in April compared to April last year.
Fonterra says despite favourable seasonal conditions and increased farmer confidence, reduced herd numbers, farm exits, and labour shortages are constraining milk production growth across Australia.
Dairy Australia is forecasting milk production to be -1% to +1% for the 2020/21 season. Australia milk production for the 12 months to April was 1.3% higher than last year.
