Sluggish milk production in New Zealand and restrained demand for dairy products have finished the 2023 New Zealand dairy season with a mixed auction outcome on Global Dairy Trade.
When the season ends on May 31, Westpac senior agri economist Nathan Penny predicts, it will be with total NZ production down 0.5% compared with the 2022 season.
The official figures won’t be out until end-June when Fonterra and the Dairy Companies Association report.
The most recent available figures were for a 7% increase in the March monthly milk collection, compared with March 2022, and minus 1% season-to-date.
Penny has also opened the batting for 2024 with a prediction of a 1% fall, citing a continued decline in cow numbers, a squeeze on farm profits and savings on fertiliser, farm maintenance and animal health.
GDT watchers had expected a 2% rise in the price index, based on the futures market movements since the first GDT auction in May.
The mix of results included a 0.9% loss for the overall price index, after two consecutive increases, a small lift of 0.3% for whole milk powder, butter up 2.2%, anhydrous milk fat down 4.5%, cheddar down 3.4% and skim milk powder down 1.6%.
Penny said these price movements, coming late in the season, would not alter his farmgate milk price forecast of $8.30, which is also the mid-point of the current Fonterra forecast range.
Fonterra will update that forecast and provide the first 2024 season forecast on Thursday, May 25, along with its third-quarter trading figures for FY 2023.
ASB economist Nat Keall said GDT prices underperformed on May 17 and broader demand and supply dynamics remain unchanged.
“Global dairy supply looks set to be better next season than it has been over the last 12 months.
“NZ milk production will lift off its lows over the season as some input costs ease, though we don’t expect it to return to the peaks reached in 2020-21.”
Keall did not venture a percentage prediction for 2023-24.