Milk and dairy products supply expected to increase in New Zealand [News Oceania n°18/2018]

Period: August 20 – 31, 2018

Australian milk production for July 2018 was -4.2% on the same time last year.

Recent extremely dry conditions have affected some dairy areas. In other areas not affected by dryness, hay is difficult to source and is increasingly expensive. The previous forecast of 1% growth in milk production for the current season may not hold.

In some regions of New Zealand calving has been later than normal, which may help to further increase total production beyond current expectations. Some dairy manufacturers are conflicted between the comfort of locking in sales, and the hope for firmer prices if they hold back in finalizing contracts.

Fonterra has revised its 2018-19 forecast Farm-gate Milk Price from 7.00 NZD/kgMS to 6.75 NZD/kgMS, in response to stronger milk supply signals coming from other markets.

Dairy commodities prices in Oceania are decreasing.

Butter prices are lower. Prices have weakened since mid-June, due to more Butter availability. This trend is expected to continue.

WMP prices are lower. The price range this year peaked at the end of April, and the general trend has been lower since then. There is substantial financial investment in plant capacity to make WMP, therefore many Buyers now expect there will be WMP readily available in the coming months and are more aggressive in pricing.

SMP prices are weaker, probably following the trend of Butter and SMP.

Cheddar Cheese Buyers are confident that there will be cheese available in the future, so the prices, which increased in August, now are lower.

– Assessments about market trend are expressed in US$;
– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team