Dry, hot weather in December caused a "significant" 6 per cent decline in milk production over the month, compared with the same month a year earlier, Fonterra said in its latest market update.
Wet weather early this month had helped some regions but further rain in the next few weeks would be needed to see any recovery in production, particularly in Waikato, Taranaki and Central Districts, the co-operative said.
"Dry weather in early December significantly impacted soil moisture and pasture quality across the country," Fonterra said.
"While the recent wet conditions have helped in some regions, it is unlikely to be enough to bring production back to previously anticipated levels," it said.
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December production fell by 8 per cent in the North Island and fell by 1 per cent in the South Island, compared with December a year earlier.
Fonterra last month lowered its forecast milk collection from 1,525 million kg of milksolids to 1,480m kgMS - a 3 per cent decrease on last season's collection of 1,526m kgMS.
Fonterra said its forecast farmgate milk price for the season remains at $6.40 per kg of milk solids.
Off GlobalDairyTrade sales contributed 3 cents per kg to this forecast Farmgate Milk Price for the season to date in the first quarter, it said.