Tuesday, 10 October 2017 12:55

Fonterra eyes 3% growth

Written by  Sudesh Kissun
John Wilson. John Wilson.

Fonterra chairman John Wilson says weather conditions over spring will be crucial to this season’s milk production.

While Fonterra is forecasting a 3% rise in milk production this season, Wilson points out that comes off a poor 2016-17 season.

Last year it collected 1.526 billion kgMS; this season’s forecast is 1.575b kgMS.

Wilson says last year’s season was impacted by a poor spring.

“We had a difficult spring and quite a good summer and autumn, yet we ended 3% down,” he told Dairy News.

“This season, we looked at what a normal spring would be like and given that some regions might be drier than others, overall we are looking at 3% more milk based on last year.”

Wilson says conditions so far have been challenging; the last nine months saw normal 12-month rainfall across much of the country.

In the North Island such difficult conditions have not been seen for many years.

“It has been difficult for farmers, their families, staff and stock,” he says.

“A lot depends on what sort of weather we get over the next three to four weeks; it’s getting warmer and that’s a good sign.”

Wilson says at the moment milk production is flat on last year but he expects it to rise as the co-op moves towards peak production later this month.

ANZ rural economist Con Williams agrees the weather will play a crucial role. Right now New Zealand production is on a “knife-edge” and could go either way.

“Pasture remains sodden in the North Island but generally better in the South Island.

“But equally last year’s poor performance through the seasonal peak for milk production would appear difficult to repeat, especially with farmers using more supplementary feed to maintain pasture quality and cow condition and to fill feed deficits.

“So all eyes will be on the weather for the next month or so.”

Williams says the latest dairy auction disappointed and it may now take more than a NZ production downgrade and reduced GDT volumes to hold the milk price at $6.75/kgMS.

“Prices fell for all products apart from cheese.”

Noticeably milk powder and milkfat curves were all going down.

“That means that while there is still short-term supply/demand pressure, the market appears to be banking on a rebound in NZ supply and increases elsewhere [namely Europe].”

He says last week’s auction confirms that the only thing holding up whole milk powder and butter prices recently was short NZ supplies.

While Chinese demand has been solid, it hasn’t been spectacular. Other Asian and Middle East buyers have stepped up to the mark but have struggled to absorb the higher GDT supply (Oct is peak).

“All up, softer NZ production could still see a milk price of $6.75/kgMS, but if not it seems something around the mid-$6/kgMS is more likely,” says Williams.

More like this

Fonterra sticking to $10/kgMS milk price

Fonterra has reaffirmed a forecast milk price mid-point of $10/kgMS for its farmer shareholders, with just over two months of the 2024-25 season left to run.

Featured

Pāmu farm opens gate to urban visitors

For many urban New Zealanders, stepping into Pāmu’s Pinta dairy farm near Taupo last month was the first time they had had the chance to experience farm life up close.

National

Machinery & Products

Gong for NH dealers

New Holland dealers from around Australia and New Zealand came together last month for the Dealer of the Year Awards,…

A true Kiwi ingenuity

The King Cobra raingun continues to have a huge following in the New Zealand market and is also exported to…

Data crucial to managing water

Watermetrics was formed as a water data collector and currently supplies and services modern technology such as flow meters, soil…

» Latest Print Issues Online

Milking It

Dairy power

OPINION: The good times felt across the dairy sector weren't lost at last week's Beef + Lamb NZ annual meeting.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter