Milk production powers ahead despite low prices

Photo / Sarah Ivey

New Zealand milk production powered ahead in the month of July - the second month of the new season - despite very low product prices, according to Dairy Companies Association of NZ (DCANZ) data.

July milk production came to 19.01 million kg of milk solids, up from 13.1m kg in June and up 13.2 per cent from the 16.79m kg produced in July last year.

Milk production over the last four months has been running strongly, thanks mostly to an unusually productive late autumn flush. The peak production months are September and October.

• Fonterra auction tactic succeeds - but long way still to go
• Dairy prices tipped to recover next year
• Uptick on cards for dairy price

GlobalDairyTrade (GDT) auction prices have been improving over the last two sales but analysts said domestic and international production needs to decline for prices to keep improving.

Expectations are that a higher-than-normal cow cull, more restrained use of feed supplements, adoption of less intensive farming techniques and curtailed off-farm grazing will result in lower production and better prices.

See the latest dairy price changes here:

At this week's GDT auction, whole milk powder prices, which are key to determining Fonterra's farm gate milk price, rose by 12.1 per cent to an average US$2,078 a tonne but well short of the US$3,000 a tonne needed before Fonterra can deliver on its $3.85kg milk price forecast.

DCANZ data covers all the main dairy companies, including Fonterra, Tatua Co-operative Dairy Company, Westland Milk Products and Open Country Dairy.