Inside Milk
Milk price increases milk supply in New Zealand
Dairy farms in New Zealand kept milk production at a high level in April. This continues the trend of the previous months. The dairy farmers are responding to the rising milk prices of dairy giant Fonterra and the rising quotations on the Global Dairy Trade (GDT).
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New Zealand reports a milk supply of 1.514.000 tonnes of milk for April. This is more than 10% more than in 2020. New Zealand dairy farmers have also milked more in recent months than in previous years. The fact that milk production remains high is due to higher milk prices that dairy farmers receive.
For example, the GDT has been at a higher price level for several months. Fonterra has already increased its milk price 4 times in recent months and yesterday (Wednesday May 26) record high forecast price for the new milking season 2021/22 announced. Prices are driven up by a high demand for dairy products such as milk powder from Asian countries and China in particular.
From a practical point of view, it is not good for dairy farmers that the milk price is now peaking. This is because dairy cattle are heading for the dry period, which means production is in a trough. As a result, dairy farmers cannot optimally benefit from the good milk price.
Expectation
In the coming months, the milk supply will decrease even further, with a dip in July. After this, the calving period begins, causing milk production to increase again. Dairy quotations appear to be stabilizing at the current higher level, which means it is possible that the milk price will remain relatively high in the coming six months. Dairy farmers can then benefit from both a high milk supply and a good milk price.