How will the 2019/2020 milk season end in Oceania?

New Zealand produced 2% more milk in June this year than in June last year. Australia has gone one step further with a 6% increase in production in May compared to May 2019. Looking at the year around, New Zealand has lost 12% in production in the past 0,5 months compared to the previous season and Australia has 1,1% less collected from May 2019 to May 2020.

Production cycle
May, June and July are the months in which milk production in New Zealand decreases significantly. After these winter months, production makes a significant jump in August. This can sometimes lead to more than 1 million tons more milk. The difference between the deepest valley and the largest peak can sometimes differ by more than 3 million tons. Production in June usually contributes 1% to the total production of the milking season. According to Fonterra, the increase that is now taking place compared to the previous season is due to a warm start to the winter with a large amount of rain. A total of 230.000 tons of milk was collected in June this year, 4000 tons more than last year.

In Australia, the annual 'dip' lasts a little longer. This starts in February and picks up again from August. The annual peak normally occurs in October. The difference between the deepest valley and the highest peak is generally smaller in Australia than that of New Zealand at 300.000 tons and the road to the new peak is also quite a bit slower than that of its southern neighbors. In May this year, Australian dairy farmers produced 650.400 tonnes, more than 45.000 tonnes more than the year before.

Export
Despite the fact that production increased, exports fell sharply, both in May and over the entire year. Australian exports were particularly hit hard in May. This fell by more than 18% compared to the previous year. Looking at the current dairy market, it is almost certain that the corona crisis has contributed significantly to this. Over 12 months, exports fell by 8,9%. This was not so much due to one product, exports of almost every dairy product declined.

In New Zealand, exports fell by 7,6% in May compared to 2,7% over the 12-month period (May to May). Here, the decline in May was mainly due to smaller volumes of whole milk powder sold to China and Bangladesh. Less butter has also been shipped to China. Over the 12 months, the decline was mainly reflected in the export of butter, whole milk powder and butter oil (AMF).

Fonterra
Milk processor Fonterra managed to collect more milk in New Zealand last year. In total, 2,7% more was collected in June compared to last year and there was also a 30% increase in the total milk collection over the period June 2019, 1 to June 2020, 2,7. There is a difference between the yields in the North and South Island. For example, production on the North Island decreased by 30% compared to June last year and in the period from June 2019, 1 - June 2020, 1,2. The effects of the dry summer continued to have an impact on the North Island for a long time. On the South Island, the collection increased sharply by 16%. The reason for this is that the island started the season strongly with high productions.

In Australia, Fonterra is experiencing a decline in supply. Compared to June last year, production fell by 2% this year. The production of the 19/20 season decreased by 11,8% compared to the 18/19 season. According to the processor, the decline is due to the drought, high costs for the dairy farmer and the highly competitive dairy market. The prospects are more positive, as the weather seems to be good in terms of precipitation.