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New Zealand milk output peak lowest in four years

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New Zealand's milk output has, in a potential support for prices, set its weakest seasonal peak in four years and has extended its decline since, as poor weather exacerbates a dent to output from weak values.

Fonterra - which processes the vast majority of milk in New Zealand, the top dairy exporting country – confirmed that the country's output fell by 5% year on year in October, which normally sets the monthly production peak.

"The recent challenging conditions have had a significant impact on peak milk volumes," Fonterra said, referring to a setback from unseasonably wet weather.

"Fonterra New Zealand milk collection over the peak was impacted by unfavourable weather conditions across most dairying regions," the co-operative said.

'Global decline'

The shortfall means that combined milk output from Oceania and Europe was 1.6bn pounds less in October than the year before, said the US-based Milk Producers Council.

New Zealand milk production so far in 2016-17, (year-on-year change)

November: 2.485m tonnes, (-4.5%)

October: 3.036m tonnes, (-5.5%)

September: 2.570m tonnes, (+1.1%)

August: 1.342m tonnes, (-2.7%)

July: 231,000 tonnes, (+0.9%)

June: 147,000 tonnes, (unchanged)

Source: Dcanz

Milk production deficits in South America and China "have augmented the global decline", the council added.

November decline too

And the drop in New Zealand production is seen as having continued last month, for which industry group Dcanz reported a 4.5% drop in domestic output to 2.85m tonnes (234.8m kilogrammes of milk solids), the lowest November figure since 2011.

Fonterra said that its milk collections last month fell by 7% year on year to 194 kilogrammes of milk solids.

And the co-operative, underlining the weather setback said that "these lower volumes are expected to flow through the remainder of the season", which ends in May.

Other observers have flagged the setback to output from farmer spending cutbacks, with the DairyNZ producers' group this month flagging "reduced expenditure across the board, particularly in supplementary feed, repairs and maintenance… and animal health and breeding".

'China import growth rebounded'

Meanwhile, Fonterra reported "solid growth in exports" for October in particular for Oceania volumes, seen rising by 6-7%, while European shipments rose by 14% in August, the latest month for which data are available.

"China import growth rebounded in October," rising by 15% year on year, Fonterra said, with demand for fluid milk and fresh dairy proving especially strong of late.

"But imports to the Middle East and Africa remain soft," the group said, with volumes down 6% in the year to August.

By Mike Verdin

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