Dry weather reduces milk production

New Zealand milk production fell from yearearlier levels for the first time in 11 months in February due to dry weather.

The country’s dairy farmers produced

165 million tonnes of milk solids in February, about 0.1 per cent less than the same month last year, according to Dairy Companies Association of New Zealand data.

The decline was the first since March last year and trims the production gain for the season that started in August to 4.9 per cent.

NZX dairy analyst Robert Gibson says the reduction was due to dry conditions in January which continued into the first half of February.

BNZ noted that processor-imposed penalties for excessive use of some supplementary feeds may also have reduced production. Spring and early summer conditions had been “superb” but they had deteriorated significantly in the past two months.

“While some recent rain will help at the margin, we don’t think it will be enough to prevent milk production falling behind a year ago,” the bank’s economists said in a note.

Dry weather, particularly on the North Island, prompted Fonterra to trim its fullyear production forecast last week, the second cut in two weeks.

Falling lake levels are also holding up power prices. Storage in Lake Taupo, which supplies Mercury NZ’s plants on the Waikato River, is at its lowest since May 2016.

Recent North Island hydro inflows, based on a four-week rolling average, are the fifthlowest in 88 years of records, according to Energy Link. South Island inflows were the

25th lowest.