Milk production in New Zealand continues to decline as the poor spring weather, coupled with the difficult financial situation many dairy farmers find themselves in, takes its toll on milk output.

The latest figures from Dairy Companies Association of New Zealand (DCANZ) show that milk collections for November were 2.85m tonnes, a 4.5% decline compared with the same month last year. This follows from the 5.5% decline in milk supply recorded in October, the country’s month for peak milk production.

The months of October and November account for 30% of all the milk produced annually in New Zealand.

At these rates of decline, milk production is back in line with 2012 levels.

In the milking season to date (June to November), New Zealand milk production is running 3% behind 2015 levels, but more drops in milk supply are expected in the coming months to widen this shortfall further.

Fonterra, the largest dairy processor in New Zealand, is forecasting its own supply for the full milking season in 2016/17 to be back about 7% year-on-year in milk solid terms.

Milk production

In the US, the opposite situation is unfolding as milk production is driving ahead of last year.

For November, US milk production increased 2.4% year-on-year to almost 7.8m tonnes. This brings US milk production in the first 11 months of 2016 to a cumulative 88m tonnes, which is 1.8% ahead of last year.

US dairy farmers are on course to pump out 96m tonnes of milk for the full year in 2016, which will be the highest US milk output on record.

Farmgate milk prices in the US have averaged just over 32c/litre this year, which is slightly lower than 2015 levels when prices were at an average of 35c/litre.

Strong dairy demand in the domestic US market has made US farmgate prices more resistant to the recent declines in global dairy markets.