World’s biggest dairy exporter to increase milk production again
Output will advance 2.3% to 1.856bn kilogrammes of milk solids in the year ending May 31, 2015, the Ministry for Primary Industries said. The dairy herd expanded to 5.01m cows on July 1, 2013, from 4.82m a year earlier, and will hold at 5m this year.
Earnings from milk have dropped for New Zealand farmers amid increasing global supply, helping curb world food costs.
Prices will extend declines over the next year as exporters in the US and Europe boost output and slower economic growth limits demand in China, the largest buyer of whole milk powder.
Fonterra, the biggest dairy exporter, forecasts that supply in New Zealand will increase 2% in 2014-15.
Rising output is “a result of a continued long-term trend in increasing cow numbers and more moderate growth in milk yield per cow”, the government report said.
“Dairy prices have been falling over the last few months and are expected to remain subdued” after New Zealand, the US, EU and Australia boosted production, it said.
Whole milk powder prices have tumbled 28% since reaching this year’s high of $5,005 (€3,695) a tonne on February 4, according to Fonterra’s twice-monthly GlobalDairyTrade auction.
The average winning price was $3,594 (€2,653) a tonne on June 3 from a record $5,245 (€3,872) on April 16, 2013.
Fonterra will pay its farmer shareholders NZ$7 (€4.38) per kg of milk solids for the 2014-15 season from NZ$8.40 (€5.28) a year earlier. The company forecasts supply at 1.616bn kilograms of milk solids in 2014-15 from 1.584 billion a year earlier.
World food prices declined 1.2% in May, according to the UN’s Food and Agriculture Organisation.
— Bloomberg
