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Fonterra collected 2.3% more milk in NZ in April on better weather, pasture quality

Tuesday 5th June 2018

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Fonterra Cooperative Group collected 2.3 percent more milk from its New Zealand suppliers in April, largely due to favourable weather conditions and improved pasture quality in the South Island. 

Auckland-based Fonterra said it collected 120.3 million kilograms of milk solids in April this year, up from 117.7 million kgMS in April last year. Its North Island collection fell 2.1 percent to 65.3 million kgMS while its South Island take jumped 8.1 percent to 55.1 million kgMS. In total, New Zealand produced 148.2 million kgMS in April, up 3.1 percent from the year-earlier month and the highest ever level recorded for April, according to the Dairy Companies Association of New Zealand.

The country's dominant milk processor said its New Zealand milk collection in the first 11 months of the dairy season up to the end of April was down 1.7 percent to 1,434.2 million kgMS as it collected 3 percent less milk from the North Island while its South Island take edged up 0.2 percent. That's a steeper decline than for the industry as a whole, with national production in the season-to-date down 0.9 percent, suggesting rivals have picked up more of the national milk pool.

By contrast, Fonterra's milk collection in Australia jumped 25 percent to 11.4 million kgMS in April compared with the same month a year earlier. In the Australian season-to-date, covering the period from July 1 through April 30, Fonterra collected 131.8 kgMS, 26 percent more than the year-earlier period.

"This growth in April is due to a combination of favourable seasonal conditions supporting strong production growth and the increase of milk collections from new suppliers," the company said in its latest Global Dairy Update published today.

Fonterra, the world's largest dairy exporter, noted that in the key Chinese market, imports had returned to growth in March, increasing 3 percent compared to the same month a year earlier. It said strong demand out of China continues with imports across all key categories up for the 12 months to March. Still, imports were weaker in Latin America, the Middle East and Africa, it said.

Conversely, dairy exports for all regions were growing strongly as production increased, with total New Zealand dairy exports up 12 percent in March, Australian dairy exports up 26 percent in March, European Union exports up 10 percent in January, and US dairy exports up 23 percent in March, marking the highest monthly volumes exported for the country since March 2014.

For the 2018/19 season, Fonterra expects New Zealand milk collection to rise 1.5 percent to 1.525 million kgMS.

Units in the Fonterra Shareholders Fund, which gives investors exposure to Fonterra's earnings, advanced 0.6 percent to $5.24, having shed 19 percent this year.



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