Fonterra says season milk collection to fall by 5 per cent

Fonterra said it now expects its milk collections to be down by 5 per cent for the current season, compared with a previous forecast of a 7 per cent decline, which means it will now offer more product for sale through the GlobalDairyTrade auction system.

In its monthly global update, Fonterra said milk production had improved, particularly in the North Island.

European milk production had decreased for the sixth consecutive month and volumes in New Zealand and Australia continued to be affected by bad weather, it said.

US exports continued to grow with a sixth consecutive month of positive growth. Recent export strength out of New Zealand and European Union appeared to be softening. Global import growth had softened but remains strong for the year, it said.

Total New Zealand milk production for December was down 3 per cent compared to the same month last year and for the 12 months to December, milk production is was down 2 per cent compared to 2015.

"Adverse weather, particularly through peak months placed downward pressure on volumes," the co-operative said.

In a separate statement, Fonterra said it had increased its forecast offer volumes for the GlobalDairyTrade by 10,545 tonnes over the next 12 months.

"The changes come in response to Fonterra New Zealand milk collections showing signs of improvement since the unfavourable weather conditions throughout the peak months," it said.

"However drier conditions are persisting across the North Island, including drought conditions in Northland," it said.

A wetter or drier-than-normal late summer and autumn conditions would be a driver of volatility in milk collection volumes, it said.