New Zealand’s largest dairy processor has cut its forecast for milk collections for the 2017/18 season by 4% to 1,480m kilograms of milk solids (kgMS).

This follows a 1% reduction in milk output forecast in early December when Fonterra forecast 1,525m kgMS.

Dry weather is the main driver in the reduced forecast, with dry conditions expected to continue. If wet weather does follow in the new year, it is unlikely to lead to a significant increase in supply in the 2017/18 season.

In response to the lower milk supply, the co-op has started to take volumes of whole milk powder off the GDT auction platform.

"A programme is in place to carefully manage sales both on and off GDT for the rest of the season as a result of the current weather conditions," Fonterra said in a statement.

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