New Zealand milk season off to a slow start
The latest on the current New Zealand milk production and how you can secure your demand.
14 Dec 2022
2 min
The milk production season in New Zealand has kicked off with a weak start, the latest DCANZ1 report shows milk production across New Zealand has dropped for the fourth month in a row, with October production at -2.9% (on a kgMS basis vs last year and -3.5% on a kgMS basis) below 2021/22 season to date.
Coming to the peak of the season, this has been the lowest October for NZ milk in the last 5 years1.
There are a number of factors contributing to the weak performance, with adverse weather conditions as well as record high input costs – across a broad range including fertiliser, fuel and labour.
Weather has continued to put pressure on production, with a very wet spring muddying up pastures, while peak milk through October saw one of our hottest springs in history, impacting the quality of pasture. Pasture samples from across the Waikato showing that both dry matter and energy levels are lower than expectations, creating a double impact for cows, and thus milk production.
Stuart Davidson, Dairy Insights Manager, NZX
There is still a lot of the season to run, and there is still a level of uncertainty as weather can play a key factor role in the final full season production volumes.
Our full season forecast still expects at best a -1.6% and at worst -6.3%, we're expecting around the -4.0% mark.
Stuart Davidson, Dairy Insights Manager, NZX
What does this mean for customers?
The reduced milk availability out of New Zealand, means that supply security has become a higher priority for customers who demand high quality NZMP ingredients.
Buyers will typically either spot buy or have secured supply. Although spot buying allows customers greater flexibility, it can also cause price exposure and supply uncertainty. With supply security, businesses can have greater confidence in their forecasting, avoid disruptions to operations and focus on more strategic priorities and value-add activities by removing the distraction of supply volatility.
NZMP offers its customers the ability to take control of price and supply with their range of Risk and Commercial solutions.
The three most popular solutions that customers use to secure supply are the PriceLock, PriceIndex and PriceCollar.
NZMP Price Lock
NZMP Price Lock allows you to lock in Price and Supply and Lock Out uncertainty. It provides you with a fixed price for a fixed volume for a fixed period of time.
NZMP Price Index
If you need to remain close to the market for your business but need security of supply then NZMP PriceIndex may work best for you. The NZMP PriceIndex provides Price Transparency, is market linked and provides supply security.
NZMP PriceCollar
If you would like to follow the market but need to reduce the total volatility you may experience then the NZMP PriceCollar may suit you. The NZMP PriceCollar allows you to move with the market but minimise the risk while providing supply security.
If NZMP Risk and Commercial solutions can help your business or you would like to find out more, click here and select "Product Enquiry" --> "Business Solutions" to contact our Risk and Commercials team.
References
- [1] DCANZ New Zealand Monthly Milk Production Update – November 2022
