Fonterra's milk collection in Australia has slumped in the season to date, reflecting a loss of market share and the effects of drought.
The co-op, in its latest Global Dairy Update, said its Australia collections in December were 11.3 million kg of milksolids, down 13 per cent on December last season.
Collections across Australia for the six months to December 31 reached 60.5 million kg, down 16.4 per cent on the same period last season.
READ MORE:
• Fonterra's Te Awamutu factory abandons coal
• Fonterra looking to lift China's importance in new strategy
• Fonterra rivals fear dairy giant will get leg up from law overhaul
• Fonterra's plan for a $1b Indian business
"Fonterra milk collections continue to be impacted by challenging seasonal conditions, high on-farm input costs, decreased cow numbers and intense competition for milk," the co-op said in its update.
Melbourne-based Michael Harvey, senior dairy analyst at rural lending specialist Rabobank, said the numbers showed Fonterra had "certainly lost market share".
"The milk pool is down across the collection regions that Fonterra have a footprint in - but not by that much - about 5 per cent," he said.
Fonterra has a big milk collection in Northern Victoria which has been hampered by very high water pricing in the Southern Murray Darling Basin, Harvey said.
"I think it is part of a broader trend whereby the larger companies have lost significant market share to smaller dairy companies and new entrants in recent years," he said.
"To mitigate the losses, Fonterra can buy in some additional volumes from third parties, but they would not be able to make up completely for the losses."
Harvey said dairy companies will be hoping for a stabilisation in milk supply in the new season from July 1.
"In our view, that is possible but it will hang on better seasonal conditions through Autumn and some relief of feed costs," he said.
Fonterra, in its update, said New Zealand milk collection was down by 0.6 per cent in December compared with a year earlier.
Dry and warmer than usual weather in Waikato and Bay of Plenty and favourable rainfall in the South Island had an impact on December production figures, it said.
Season-to-date New Zealand milk collection reached 909.3m kg, down 0.5 per cent on last season.
Total New Zealand dairy exports increased by 7.8 per cent in November, compared with the same month in 2018, primarily driven by whole milk powder and butter, partly offset by a decline in skim milk powder and anyhydrous milk fat.
Exports for the 12 months to November were up 9.4 per cent on the previous comparable period, primarily driven by whole milk powder, fluid milk products, infant formula and skim milk powder.
Fonterra is due to report its first half result on March 18.