By Alexandria Winning-Browne, NZX dairy analyst
New Zealand’s August milk production printed a 4.9% decline year-on-year (YoY) on a milksolids basis. This puts the season-to-date figure down by 4.2%, with the bulk of this deficit coming from the weak August figure. This is the smallest full-month production figure for August since 2017; however, in line with our expectations. The decline can be attributed to tough conditions on the ground, with unfavourable weather conditions through the end of winter. Local processors have reiterated this sentiment, experiencing a weak start to the season.
September looks set to be another month of light milk flows. Our current milk production forecast for September has a midpoint forecast of -2.2%, and a low forecast level of -7.8%. From reports from across the country my expectation is that the true value will fall between these two lower forecast points, 4-5% down YoY. This would mean that September’s milk production figure would come out at around 208 million kg MS, which would be the lowest September volume since 2017, the same trend as in August. This forecast figure would put the season-to-date figure at the end of September -3.8% behind YoY.
Looking at the full season’s forecast, our model is currently indicating a YoY decline of 1.3%, with our current model expecting peak milk production months and summer milk production months to deliver greater than the year prior figures, even if just slightly. I’m not as convinced of this outcome as the model is. Across the country, on-farm issues continue to plague the industry, labour continues to be reported as one of the limitations, with every farmer I’ve talked to short of staff, or impacted by this facet in one form or another. Climatic conditions are undoubtedly having an impact on milk flows too, but this factor is being exacerbated by on-farm issues. Weather patterns for this season are expected to follow a similar path to last season, with the La Niña pattern more and more likely to have a large impact on the second half of the NZ dairy season. The key takeaway is that our expectations at this point in time are that of another year of weak milk production.
