Source: Radio New Zealand
New Zealand milk production hit historic levels in October. 123rf
New Zealand milk production hit historic levels in October, with national collections rising 2.8 percent year-on-year.
It marked the biggest October since 2018 and the third-largest month for milk production in New Zealand’s history.
It came as high global supply of milk saw Fonterra lower its forecast farmgate milk price on Tuesday to a mid point of $9.50 per kilogram of milk solids for the current season, down from $10.
NZX dairy analyst Lewis Hoggard said the lower payout would discourage farmers to carry on record milk production.
“There’ll definitely be a correction over time,” he said.
“Farmers have a sort of break-even price for what’s necessary in order to justify how much feed input they need to use. So by lowering that forecast that is gonna disincentivise a little bit of production.
“But $9.50 is still pretty strong, so I still see production being relatively strong going forward.
“But as payouts come down that should bring the supplementary feed down as well.”
Strong pasture growth earlier in spring and a high milk price had farmers feeding more supplement, with palm kernal imports (PKE) up around 7 percent in October.
PKE imports for the season so far were sitting 32 percent higher than last year too.
Hoggard said this was a sign farmers had been pushing production while payout expectations remained strong.
He said despite the reduced payout, Fonterra had lifted its forecast milk collections for this season to 1.545 billion kilos of milk solids, which signalled ongoing production strength.
Meanwhile, in Europe, dairy farmers have warned of a deepening price crisis, with the European Milk Board calling for immediate voluntary production cuts to stop prices collapsing.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
