The big rebound in New Zealand milk production for 2017 forecast six months ago has been thwarted by the weather, the U.S. Department of Agriculture (USDA) said in a report, forecasting a modest increase of only 1.3 percent over the previous year.
“Milk supply for 2017 is now estimated to reach 21.5 million metric tons (mMT) a modest 1.3% increase over 2016. The potential for a 3% rebound or better, set up by kind temperatures and ample rainfall during the first six months of 2017, has been reversed by a cold, very wet spring (August and September) over most of New Zealand,” the report said.
According to the report, the poor weather conditions had made it all but impossible to feed and maintain the cows to optimum levels.
Looking ahead to 2018, a small increase in actual cow numbers to 4.95m head and normal weather patterns should mean milk production will reach 21.6mMT, a 0.5% increase, the report said.
Wet and cold Spring weather has thwarted the anticipated 3% rebound in 2017 milk production. Now New Zealand 2017 milk supply is forecast to reach 21.5 million metric tons, a modest 1.3% increase over 2016. An even more modest increase of 0.5% in 2018 should mean milk supply reaches 21.6 million metric tons. Exports for 2017 will come off the boil just, to record a 0.7% reduction to 3.26 million metric tons then resume an upward trend in 2018 to be forecast at a total of 3.32 million metric tons.
Financially, the report pointed out, New Zealand dairy farmers have come out of the two year milk price trough (2014/2015 through 2015/2016) to get paid on average NZ$6.10/kilogram (kg) milksolids (USD4.31/kg MS), with a forecast of NZ$6.75/kg milksolids (USD4.77/kg MS) for 2018.
“Total business breakeven for most farms is put at NZ$5.00/kg to NZ$5.50/kg milksolids. The small increases in milk supply should push dairy production up to an estimated 3.13mMT in 2017 and on to 3.17mMT in 2018, year-on-year increases of 3.6% and 1.2% respectively,” the report said.
Among the main commodities, the key movers in 2017 are: whole milk powder (WMP) and cheese up 3.8% and 5.6% respectively to 1.38 mMT and 380,000 MT. On the negative side skim milk powder (SMP) and butter/anhydrous milkfat (AMF) are likely to be down 5.8% and 6.7% respectively at 390,000 MT and 545,000 MT.
According to the USDA, the real action is with the specialised and alternative products such as: cream, infant milk formula, specialised protein products, and fresh cheeses.
“For example the non-PSD production total is likely to grow 4.8% to 436,000MT in 2017 and a further 5.5% to 460,000 MT in 2018. The trend away from the traditional commodities to higher value/higher profit alternatives is becoming clearer and is reflected in the export mix as well,” the report added.
It forecast total exports at an estimated 3.26 mMT for 2017 will be 0.7% less than 2016 – the decline being the result of the run down in stock levels during 2016 that boosted export volumes in 2016 that will not happen again in 2017.
“However non-PSD products at an estimated 436,000 MT shipped for 2017 will show a 4.8% increase over 2016. This trend is forecast to continue in 2018 with non-PSD exports to increase by a forecast 5.5% to 460,000 MT. Total dairy exports in 2018 are forecast to be up by just 1.6% at 3.32 mMT,” the report said.