Deliveries of milk in Australia during December were well back on the same period in 2014. A sharp slowdown in production in western Victoria was the primary cause of the reduction in milk output.

Parts of western Victoria were extremely dry in December and this caused milk intakes for that region to drop by 5.3% on the same month in 2014.

This big drop in production from western Victoria eclipsed gains made in the rest of the state. Overall milk intake in Victoria was down 5.3% in November but is still ahead on a season-to-date basis.

New Zealand

New Zealand milk production fell but not to the same extent in December. New Zealand farmgate milk prices remain weak, contributing to the recent declines in milk production.

In early December, Fonterra reaffirmed its forecasted farmgate milk price of $4.60/kg MS, but revised the projected annual New Zealand milk production forecast downward from a 5.0% year-on-year decline to a 6.0% year-on-year decline for the season.

New Zealand milk production would need to decline by over 8% over the final half of the remaining production season to reach Fonterra’s projected 6.0% annual decline.

Figure 3 shows the monthly decline in New Zealand milk supply relative to the previous season since cows started calving in August, almost six months ago now.

The recent increases in New Zealand cow and heifer slaughtering have corresponded with the decline in milk production. Additional heavy culling is expected to continue to reduce milk production in coming months. According to Fonterra, New Zealand dairy producers continue to reduce stocking rates and supplementary feed to help reduce costs in the low milk price environment.