Milk production may rise 8.3% this season

Wednesday 20th May 2009

New Zealand’s milk production may increase 8.3% to 16.4 million tons this year, reflecting a record-sized national dairy herd and more favourable weather that encouraged pasture growth.

The estimate comes from the Global Agricultural Information Network (GAIN), part of the US Department of Agriculture, in its semi-annual report on New Zealand’s dairy industry. Production for the 2010 season is estimated to rise 1% to 2%, it said.

The national herd included 4.365 million cows in milk at the start of the current season, 165,000 more than a year earlier. GAIN cited industry contacts predicting a 6% increase in Fonterra’s milk collection, a gain of as much as 9% for Tatua and a rise of up to 2% for Westland.

New Zealand inventories were 175,000 tons to 200,000 tons higher than normal in February and March, GAIN’s report said. As prices fell, customers returned to the market at the end of January and whole milk powder (WMP) exports during the first three quarters of the current season are about 7% down on the previous year at about 441,000 tons.

Still, shipments in March were 32% higher than in March 2008, it said.Total WMP exports this season are forecast at 710,000 tons while export shipments may total about 620,000 tons.

Fonterra chief executive Andrew Ferrier said the co-operative had “a huge shipment month in April” and the build-up in inventories is abating as expected. Its decision to run higher inventories in October and November has now been vindicated, helping avoid “a further knock on the market.”

GAIN cited unnamed industry contacts as saying Fonterra “has basically sold all of this year’s production but actual shipping volumes out of New Zealand are three weeks to a month later than in past years.”

The GAIN report is available on its website.Exports of WMP to China surged to almost 41,000 tons in the first quarter from just 7,300 tons a year earlier.

The GAIN report said the arrival of new entrants in New Zealand’s milk market means that Fonterra’s market share may shrink to as low as 84% by 2013 from 92% currently.

Businesswire.co.nz

Comments from our readers

No comments yet