Right now, dairy markets are playing very close attention to the numbers coming out of New Zealand. Fonterra, New Zealand’s largest dairy processor, has already cut its forecast for its own whole milk powder (WMP) supplies for the coming year by more than 10,000t as it adapts to a sharp fall-off in its milk supply.

New Zealand accounts for 50% of all WMP exports on the global market and Fonterra’s signals to the market of tightening supplies have sent WMP prices soaring, as seen at last week’s GDT auction.

Fonterra is blaming the reduced supplies of WMP on the severe drop-off in milk collections from its New Zealand suppliers, who are contending with a wetter than normal spring. In the important Waikato region, Fonterra says milk collections are back 14% in October alone.

Although Fonterra does not account for 100% of New Zealand milk collections, it does act as a very strong bell weather for the entire industry. In August, total New Zealand milk collections fell 2.7% year-on-year, which was in line with the 3% decline in milk output forecast earlier this year by Fonterra.

However, in September the numbers confounded many market onlookers as New Zealand farmers actually increased milk output by 1.1% compared to 2015. As such, all eyes will now be on the official figures for October milk collections in New Zealand due to be released later this month to get a better picture of the supply picture.