Fonterra milk collections remain below previous season, trend shifts in Oz

Thursday 12th January 2017

Milk collections by Fonterra Cooperative Group this season are continuing to track below the previous year, mainly due to lower production on the North Island.

Collections in the seven months from June 1, 2016 to Dec. 31, 2016 were 881 million kilogrammes of milk solids, a fall of 5.5 percent on the same period in 2015, when prices were much lower. Some 186 million kgMS were collected in the month of December, down 5 percent on the same month a year ago.

There was a clear gap between the two main islands of New Zealand. Collections on the North Island fell 7 percent from June to December, while on the South Island they dropped just 2 percent in the same period. The fall in New Zealand production over the period is ascribed to a particularly wet spring, especially in the key dairying area of the Waikato.

Australian production was down 8 percent between July 1, 2016 and Dec. 31, 2016. However, in the month of December, collection actually rose 1 percent on the same month in 2015, suggesting farmers had responded to the rapidly rising price at the GlobalDairyTrade auction. Many farmers had also culled their herds early in 2016 due to a persistently low dairy price.

Dairy prices soared in the second half of 2016, but have since fallen back slightly. At the most recent GDT auction, prices fell for the second consecutive auction as the market struggled to absorb the increased volume on offer.

Units in the Fonterra Shareholders Fund, which offers investors exposure to the cooperative's earnings, rose 1.8 percent to $6.25. They've risen 2.3 percent since the start of 2017, and have risen 9.4 percent compared to this time a year ago.

BusinessDesk.co.nz

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