New Zealand milk production lifted by 1.8% year-on-year in September, on a milk solids basis, while season-to-date production was up by 2.9%. As a major dairy exporter, New Zealand’s performance can influence global dairy prices.

Milk production in New Zealand for the full 2020-21 season* is expected to grow by 1.5%, which is lower than originally forecast (+2%). This reduction is due to declining pasture growth conditions in recent weeks and slightly lower than anticipated production in September.  

October production levels are expected to show an increase, a result of good pasture growth conditions seen throughout September. However, October experienced dry weather conditions which are expected to continue. As such, while milk supplies are still expected to increase, dry soil conditions are likely to impact production growth in the coming months.

These conditions are also expected to add further pressure to feed costs. As the price of palm kernel has recently increased, any additional demand resulting from poor pasture conditions is likely to drive up the price further. This could impact profitability for New Zealand producers over the coming months.