New UHT plant construction starts
Construction is underway at Fonterra’s new UHT cream plant at Edendale, Southland following a groundbreaking ceremony recently.
The co-op now expects to collect 1.540 billion kgMS from its suppliers; earlier it was expecting 1.575b kgMS.
In its October Global Dairy Update, Fonterra says milk collection will be only 1% higher than last season, which was hit by a poor spring.
The co-op says weather in August and September this year have impacted milk production across most of the country.
“The full season forecast is dependent on improved conditions through the rest of the season,” it says.
Rabobank dairy analyst Emma Higgins says the drop in NZ milk production has not rattled the markets; global milk prices have fallen in recent Global Dairy Trade (GDT) events.
She says whole milk powder prices have fallen in recent weeks despite Fonterra revising production forecasts.
“Milk collections are expected to increase just 1% compared to last season, down from 3% growth expectations set earlier this year,” says Higgins.
“Fonterra’s milk production forecast at 1% would see national production bounce 2 - 3% on last season. This is in line with Rabobank production growth expectations of 2.5 - 3.5% for the full season and anticipation for an extended, flatter peak of the season.”
Higgins says the global markets may react if NZ milk production forecasts fall further.
“We may need to see NZ milk production numbers drag lower before we see a price reaction emerge on the GDT platform,” she says.
Fonterra’s milk collection across NZ reached 171 million kgMS in September, 2% lower than September last season; for the four months to 30 September, milk collection was down 1% at 294m kgMS.
North Island milk collection in September reached 108m kgMS, 2% behind September last season; South Island milk was 63m kgMS, 2% behind last season.
Outside NZ, milk production data continues to show supply growth.
US milk production for the 12 months to July 2017 continues an upwards march of 2%, driven by higher yields and cheap feed. Irish milk production is leading the charge for growth out of Europe and although the supply engines of France and Germany are still behind last year’s production, Poland and Italy are also in positive territory for July 2017 year-on-year.
Australia milk collections were up 1.6% in the first two months of the new season.
