Fonterra says full-season milk collection up 1.2%

By Gavin Evans

June 26 (BusinessDesk) - Fonterra says its New Zealand milk collection for the year through May rose 1.2 percent despite a weak end to the season.

New Zealand’s biggest milk processor collected 1,522.7 million kilograms of milk solids in the year, and noted that the prior year had been a poor production season.

Fonterra said May production by its suppliers fell to 68.4 million kgMS, down 3.5 percent from a year earlier, despite more favourable conditions across many regions in recent months. Conditions in May 2018 had also been more favourable, the firm noted in its latest dairy update.

The firm is forecasting a slight reduction in its collection in the current season to 1,520 million kgMS.

Last week, the Dairy Companies Association of New Zealand reported that the country’s milk production for the season ended May climbed to 1,884 million kgMS, 2.4 percent more than the year before.

Amy Castleton, senior dairy analyst with NZX, noted that Fonterra’s forecast implies a decline of 0.2 percent in its collections this season.

“NZX is forecasting a 0.4 percent increase for total NZ milk collections in the 2019-20 season, based on more cows being retained and normal climate conditions throughout the season.”

Today’s data shows Fonterra’s share of the country’s milk collection fell to about 81 percent last season, from about 82 percent a year earlier. Other producers include Open Country Dairy, Synlait Milk, Westland Milk Products, Tatua and Yashili.

Fonterra said its North Island collection for the season totalled 893.3 million kgMS, 0.1 percent more than the year before. Conditions improved in the upper North Island late in the period, but May’s collection was still 10.7 percent lower than the year before at 31.1 million kgMS.

Full-season production for the South Island totalled 629.5 million kgMS, up 2.7 percent from the year before. May production was 3.5 percent higher at 37.3 million kgMS, with more central South Island farms than usual milking through to the end of the season, the company said.

Fonterra said its milk collection in Australia during the 11 months through May totalled 115.1 million kgMS, 19.8 percent less than the same period a year earlier. Collections in May fell 31.4 percent to 8.1 million kgMS.

It noted that Dairy Australia is forecasting that full-season production will be 7-9 percent lower than a year earlier due to the on-going drought.

Fonterra noted that its share of milk collections there continues to fall. Drought and high input costs have increased cow culling and farm exits in some key producing regions. The company's market share has also declined in a “highly competitive market,” it said

(BusinessDesk)

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